Innovation is our constant companion. Contactless payment by credit card, smart home solutions, or delving into virtual worlds with the aid of VR headsets are just several examples for innovations that have found their way to the mass market. The fact these items are in use is proof of successful execution. And that, in turn, always starts with an idea. With the new technological possibilities of today, ideas can be implemented with much more speed and at times even much more profitability. By tapping into this potential, new companies can swiftly become competitors to current market leaders and established players.
Well-established companies will likewise have to leverage the opportunities presented by technology to be successful with their products and services in the future. Yet how are they to structure themselves to take on the challenges of the digital age? How can they maintain or even expand their business in the future while also using new digital business models to invest in their ability to compete?
Merging business and IT into business technology
Business and IT are increasingly merging, which is why classic IT departments will no longer exist in the future. Instead, IT skills and knowledge are going to be available everywhere within organizations. Business and IT will exist side-by-side, which is going to necessitate a common language. The term business technology is used to describe this context – a situation in which business innovation and business models are decisively influenced by IT. Having a clearly-formulated and central IT strategy is the basis for successful business technology.
There may indeed be exceptions to this merging of business and IT, so long as they can be organized in a sensible manner based on the business model and technologies being deployed.
Developing business technology is not something a company can tackle on the side. Our experience has shown that companies looking to innovate need to take several fundamental organizational aspects into consideration and provide employees with the space needed to successfully blaze the path toward business technology.
Yet in addition to organizational aspects, it’s also important to keep in mind how employees are the ones called upon to execute tasks in a fruitful manner. They need to be motivated and furnished with the requisite skills and technological know-how.
Clear assignment of innovation work
Success is dependent upon innovation work being properly embedded at an organization. Whether innovation is carried out at the company directly or an external unit, such as a start-up, is secondary. It is much more important there be assignment of responsibilities and clarity over which topics and technologies are viewed to be innovative and as such need to be driven forward by innovative units. In order to supply that clarity, it is important to define the company’s own innovation technology stacks.
Having clear guidelines makes it possible to perform swift allocation without friction and opens an opportunity for getting an early start on innovation work. There also needs to be a definition for the assignment of projects that are not clearly innovative in nature. For these cases, too, short and well-defined decision-making channels are a factor for success. Steering comprises a part of governance that deliberately views innovativeness as an important part of business operation.
Bundling of innovation competence
In order to increase innovativeness, a company needs to bundle innovation competence while accounting for organizational circumstances. If separate innovation units have already been formed in separate departments, then those units should be merged into a single innovation division. Having a pronounced affinity for business and IT in equal measure is essential for business and IT to grow together successfully. In addition to professional and technical skills, agile companies also require methodology competence in order to drive developments forward swiftly and flexibly.
For many companies, it will come as a surprise that having a purely internal focus on innovation won’t suffice. For that reason, it’s necessary to look for opportunities for intercommunication with external networks: Communication with end customers regarding their experiences, with partner companies and suppliers, and even with one’s own competitors. In the spirit of a fluid organization, it’s becoming increasingly important to have networks beyond a company’s own borders. What is important here is to leverage the technological potential for reaching one’s own business goals in the best manner possible.
Collaboration between innovation divisions and other business units
In addition to clear allocation of innovation work, it is also essential to have integration and interlinking with the more traditional divisions on the business and IT levels. The scope of interlinking will depend on the respective innovation subject. When it comes to establishing or advancing internal IT skills, there is generally little or no exchange with business units. Things are different in situations like innovative sales or expansion to recruiting via social media channels: here, the respective business units are essential contact partners for the innovation unit.
On the other hand, all innovation topics must be audited with respect to their technical embedding in the existing IT landscape. There needs to be contact with architecture management at an early stage, as well as with IT Security in order to review aspects that are relevant to security. There also needs to be clarity at an early stage regarding the deployment of the solutions being implemented. Every company needs to clarify whether operation is going to be overseen by the innovation unit via corresponding DevOps management, or placed into the proven hands of an existing (internal or external) operational structure.
Adequate portfolio management for improving transparency
Companies have diverse innovation requirements, which makes adequate portfolio management necessary. It is only with comprehensive and structured observation of all projects and the requisite details that targeted investments can be made for executing a joint strategy.
In addition to data completeness for innovation projects, companies should also primarily consider the following points in their portfolio management:
Definition of key information in order to swiftly obtain an overview of innovation projects in their totality.
Definition of the criteria that will be used to prioritize individual projects. Prioritization can be aggregated, or also divided into sub-categories.
The highest degree of automation possible in processing portfolio data. It is important to reduce manual expenditure as well as error susceptibility from manual data entry.
Every company needs to review the scope of innovation work and volume of projects to decide for itself whether portfolio management is going to be supported with a professional tool.
Quick insights from innovation work
When it comes to innovation work, focus needs to be placed on swiftness, agility, and flexibility. The goal is to quickly produce results that can be immediately tested for their benefits and added value. Early feedback from a technical and professional perspective is a decisive element in targeted execution. The earlier the respective units become involved, the earlier user experience comes into play, making it possible to performed directional adjustments at an early stage. This additionally also increases solution acceptance in general.
Successful innovation work requires a corresponding portion of courage. Young ideas and prototypes are frequently discarded just as quickly as they were born. Willingness to engage with these kinds of changes frequently requires a culture change. That kind of change has to be fostered by management and demanded of employees. The deployment of agile development methods has been on the rise for years, which a trend that is beneficial to companies. Yet classic development methods are still in use and frequently remain anchored in the thinking patterns of employees.
Cost efficiency as an important prioritization factor
The portfolio transparency mentioned above likewise applies to the costs and benefits of innovation projects. It is important here to give consideration to the requirements inherent to innovation work. One the one hand, there are areas in which a company would like to make targeted investments in order to identify potential. This category also encompasses the setup and enhancement of IT skills. On the other hand, there are projects with a specific value proposition, promising monetary added value (e.g. cost savings, sales increases). A business case fundamentally needs to be done for every project, and value proposition is a component to that. For the two cases described above, it is necessary to keep an eye on projected versus actual expenditure and to analyze deviations. When developments are intended to bring added monetary value, then cost efficiency will come into play as well. It is primarily during prioritization that the cost efficiency of individual projects comes into consideration.
A focus on innovation via reduction in administrative expenditure
Flexibility and agility do not mean the absence of parameters or administration. To that contrary: those aspects need to be defined with particular detail to be as lean and impactful as possible. It is important for a company’s employees to be able to focus on their innovation work. That is best achieved in a well-defined space where the principles of agility and flexibility can be lived. The respective frame needs to be demarcated clearly. Administrative work is supported by a high degree of automation in the collection and management of data.
At the end of an innovation cycle comes exnovation
The elimination of the old – i.e. the antonym of innovation – is called exnovation. At the end of an innovation cycle, what used to be new achievements are no longer befitting of the times and become outdated for various reasons. Innovations not yet known, or perhaps even inconceivable, today will take their due course and replace the innovations of the past.
Likewise, today’s successful drivers of innovation will develop into established market actors. That is why emerging companies need to give consideration early on as to how they are going to organize their innovation work in conjunction with their soon-to-be well-established business. Their initial advantage of being in a position to exclusively focus on an innovative business model will in turn be taken by emerging companies that likewise are largely unknown today.
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