Today, every organization is aware that digital technologies have great potential. If used correctly, they help reorganize business processes and create new products. But to jump on the digital transformation train, you have to be open to change. A willingness to experiment is paramount to achieving success. Plus, you need to devise a digital strategy.
The question is, how to roll up your sleeves and make digital transformation happen?
Two types of innovation: improvement and innovation
Innovation comes in different shapes and sizes. Let’s start by distinguishing between two types of innovation. First, you can improve existing processes (e.g. operational excellence). If you’re interested in going down this road, you can create a business case and justify it with an ROI calculation. Set milestones and define deliverables for the implementation process — it’s possible to plan these things in advance, as the transformation you aim to realize sufficiently resembles existing ways of working.
True innovation, however, requires a different approach. Business cases and ROI calculations are quite pointless — you’ll only find yourself explaining (over and over) why the project deviates from the original plan. Or, even worse, they will prevent people from innovating. Some will want to avoid the hassle and prevent difficult discussions (for example, on why they can’t meet preset deadlines).
Managing innovations: 3 crucial elements
First and foremost, make sure you have a budget that’s solely meant to experiment, and don’t expect to earn the money back. You’re investing in long-term change: your efforts will likely pay off in the future, but not within a few months or a year.
Furthermore, make sure you validate ideas fast and efficiently: allow your organization to test multiple ideas and only implement the most beneficial ones. It’s important to (re)define success in this context. Don’t aim to just implement as many ideas as possible. Discarding concepts that don’t work is an incredibly useful practice: if you put a halt to them early on, you won’t waste a lot of time and effort on things that will probably fail.
Finally, assemble a team of business, IT, and data experts to validate ideas. This will make it a cross-functional endeavor: all aspects of the proposed innovation will be covered, and you’ll eliminate many potential implementation roadblocks at the early stages.
A 4-phased approach (plus, the real challenge!)
To make the above-described process work, organizations can use a phased approach:
1. Proof of Concept (POC) Validate the (technical) feasibility of the idea by implementing a small, internal, standalone project.
2. Prototype Demonstrate the business concept and test user requirements via a mock-up of the UI or a product sample.
3. Minimum Viable Product (MVP) Create a first version of your idea that has just enough features to be usable by early customers. They can then provide feedback for future development.
4. Agile development Continue to develop your product.
We see a lot of companies use PoC, prototype, and MVP for business change and innovation. But the real challenge is to embrace the underlying philosophy.
Do you truly accept POCs, even if they fail? And how often do you stop after having conducted a POC?