Innovating to Survive in the Digital Economy: Part 1
Disrupt or be Disrupted
In today’s digital economy, established organizations need to be more innovative than ever before. But why? And what does that actually mean?
The truth is digitization is driving a new pace of innovation. In fact, a new wave of competition is already here and companies that don’t go digital now may not survive.
Look at what happened to Blockbuster. In 2004, it had nearly 60,000 employees and over 9,000 stores. By 2007, when Netflix began streaming movies, it had all but lost the rental war. They missed the future. Kodak is another example.In this case, the company spotted the emergence of the digital camera, but failed to react in time and the rest, as they say, is history.
The need to digitize is one of the biggest challenges facing organizations today. The Internet of Things (IoT), security, data, automation, analytics, and cloud are rapidly defining the fourth era of Information Technology. When you combine this with ever-decreasing barriers to entry for risk-hungry entrepreneurs, organizations that don’t innovate fast will pay a high price.
The question on the minds of many executives is what to do, where to start, and how to build sustainable innovation capability. To disrupt or be disrupted.
At the same time, innovation can often mean different things to different people within organizations. In my view, a good starting place is creating value by doing things differently. Sometimes it’s incremental, other times it’s breakthrough. Regardless, in the world today innovation must be part of everyone’s job. It has to move beyond the responsibility of a few senior managers or R&D specialists. It must become the norm to harness the collective talents of the many.
These factors are why building a culture of innovation has become an even bigger priority for surviving the perils of the new digital economy.
Building a Culture of Innovation
There’s no one way for established organizations to innovate. It tends to happen across multiple fronts. Some of it is visible and some takes place in what I like to call the “underground railway.” It’s out there but you can’t always see it. There’s likely to be some chaos, some trial, and almost certainly some error.
It requires leadership, collaboration, diversity, risk-taking, creativity, and many other things. The bottom line is that building world-class innovation capability is multi-faceted. It’s best tackled using a systematic and integrated approach. That includes embedding a number of innovation tools and best practices into the approach.
To begin with, there are a few prerequisites for establishing the right kind of culture to foster innovation from the outset. In my next blog, I’ll discuss these prerequisites and share some simple, but tough questions any organization must ask themselves before embarking on building a culture of innovation.