How do industrial champions drive digital innovation success?
DIGITAL innovation isn’t easy. It’s not just about allocating funds towards such projects or hiring specialists to drive digital transformation. There’s a lot that goes into really getting innovation right.
On average, small and medium-sized businesses usually have up to two digital pilot projects running at any given time, while bigger enterprises have up to a hundred.
Unfortunately, most of those projects don’t scale up because although the pilot provides enough proof that the solution is useful, it doesn’t counter the risks a new technology poses.
MIT Sloan, for example, was excited about a 2018 NewVantage Partners executive survey that said 93 percent of respondents said their organizations were investing in AI initiatives.
When they reached out to the companies to understand more about their projects, the learned that there wasn’t much progress in the projects.
“When we approached many of these companies to discuss writing some case studies about their work, most of them demurred.
“Most said the reason wasn’t that they wanted to keep their AI activities secret, but that they weren’t actually very far along and hence their projects were not worth discussing yet.
“They were doing lots of pilots, proofs of concept (PoC), and prototypes, but they had few production deployments,” revealed MIT Sloan’s blog post.
It’s interesting to note, however, that a recent Accenture study found that a handful of “industrial champions” did succeed with their digital innovation projects.
They found that while all of the 1,350 companies they surveyed were investing to scale their innovation efforts beyond the PoC stage, only a small group of them — the 22 percent champions — reached expected earnings.
Further, according to Accenture’s data, the best-performing businesses scaled more than half of their PoCs and earned returns on digital investments in excess of 20 percent.
“Scaling innovation is critical for digital transformation success, but clearly presents a challenge for many organizations. The key question is, therefore how can companies succeed at it?” said Accenture Digital Group CEO Mike Sutcliff.
The four best-practices for better digital innovations
According to Accenture’s study, winning with digital innovations isn’t as complicated as some business leaders think it is.
“The Champions we found in our research are very strategic. They leverage four specific management best practices to specify the value they’re seeking to create, and then focus on changing their organization,” explained Sutcliff.
Here are the four best-practices that Sutcliff is referring to:
# 1 | Defining the value that will guide innovation efforts:
Success comes to those who are focused. Accenture’s study of the most innovative industrial leaders revealed that the champions don’t spread themselves thin.
Instead, they identify opportunities that they want to pursue in the market at the senior-most level in the organization and then communicate that across the organization to address two key challenges:
- Digital value driven from the top down
- Innovation that’s stuck in the middle
Once these two challenges have been addressed, the company is naturally in a unique position to direct its innovation efforts to secure expected returns.
# 2 | Focusing on external value and internal change:
Digital transformation beings about a lot of change. Champions are mindful that digital innovation not only impacts the business but also the people and the processes that run the business.
As a result, those that win with digital innovations tend to try to blend technology transformation efforts with organizational change.
Doing so is a priority among organizations that get more out of their digital innovation projects and scale them up across the enterprise for maximum returns.
# 3 | Enabling innovation in each business function:
Data suggests that companies that successfully choose valuable innovation projects to work on and achieve enterprise-wide scale are usually masters at matching investments to innovation requirements.
Since time and other resources are limited and the race to gain a competitive edge in the marketplace is quite challenging, Accenture’s “champions” tend to focus on ensuring that enablers such as data analytics platforms and new models of functional collaboration are allocated to those business functions that need them the most and will use them the best.
# 4 | Building in-house innovation factories:
Although build or buy is a hotly debated topic in the world of business when it comes to acquiring new technological capabilities, Accenture’s research found that those who lead digital innovations are those who build innovation factories internally.
Data shows that champions prefer building in-house capabilities which can then be put into the service of already existing business groups. As a result, they find that the collaborative effort helps to innovate and scale new solutions.
Obviously, these aren’t pre-requisites for success with digital innovation.
However, if the wins of those leading such projects are anything to go by, these four best-practices are definitely worth considering for boards looking to get more out of their digital innovation projects.