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Innovation, a challenge for companies

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28 August 2018

In today's digital age, value is created and destroyed at an unprecedented pace.

Much of this value creation is based on the technological levers of Industry 4.0, including IoT, Big Data, Cloud, Virtual and Augmented Reality and autonomous robots. Although it isn't just industry that is harnessing this technology; all kinds of businesses and sectors from all around the world are designing strategies that enable them to be more responsive and innovative in the digital age.

Proposing innovation as a challenge in a company is not easy, but it is essential. And in some sectors, it is just as essential for growth as it is simply to survive. The real challenge for a company lies in implementing innovation and transforming it into a real product or service that adds value to the market and is profitable for the company.

A company's innovation process always begins with a stage of inspiration and capturing ideas, which can come from many sources; internal and external to the company.

In this stage, the company must decide whether the focus of its innovation is simply to introduce an improvement into its products or services or to introduce a really disruptive innovation. In the latter case, a recent IDC study has shown that only 20% of CEOs believe that their investments into innovation are worthwhile and return value. This is because there is a growing innovation gap; in other words, a misalignment between the company's strategy and undertaking purely tactical projects.

There is also a clear difference between large companies and start-ups. Today, it is mainly start-ups that introduce disruptive innovation, and whose disruptive innovation processes fail in 78% of cases, compared to 96% in large companies. The proof of this is that since 2014, the number of start-ups that join the Unicorn Club (private companies valued at more than one billion dollars), is growing every year.

The innovation process must enable successive filters to be placed on all the ideas collected during this initial inspiration stage. The first filters discard ideas by mere common sense or because of feasibility, although it is important to quickly conceptualise the product or service to introduce economic parameters: cost, resources required, expected value and impact on the turnover volume. This approach aligns each idea with a business strategy, correlates the value of each idea with the company's strategy and demonstrates its total impact.

The company must therefore be able to decide as soon as possible, based on data and results, whether an idea should go ahead or whether it should be rejected because it does not fit into the budget, market needs, company strategy or any other reason. This is key, especially taking into account that 69% of companies do not currently have a systematic method for making this assessment.

An innovation process managed in this way leads to the really disruptive ideas that can bring value to the market and a benefit to the company itself in a measurable and objective way.

Some of the benefits obtained from such an approach are:

•  Improved visibility in terms of the business's alignment with investments into new products and services

•  Better prioritisation of investment strategies, aligning them with the company's strategy

•  Rapid identification and response to opportunities and risks

•   Improved productivity

•   Increased visibility of whether or not the product or service requirements are compliant

•   Reduced costs and risks from re-dimensioning the new product or service

•   Complete traceability from the idea to its incorporation into the company's product or service portfolio, as well as all the decisions made during that process

•    Improved collaboration between the company, start-ups and all participants in general in an open innovation process

•    Obtaining a quantifiable benefit for the company

In short, what may have seemed impossible not so long ago may absolutely be possible today. Therefore, every company must be attentive to any type of disruptive innovation. It is not so much about the amount of money that is invested into technology, it is about integrating technology into companies' business models.

In the words of businessman Peter Diamandis, "if we believe that disruptive innovation only comes from our own company, we are mistaken".

 

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