Your Guide to Driving Digital Innovation
What’s the first thing to come to mind when you think of innovation? For many, it might be Steve Jobs, iPhone in hand, wearing his classic black turtleneck. The iPhone is the perfect example of digital innovation. Jobs and the Apple team built upon an idea that already existed (mobile phones) and turned the devices into an integral part of our daily lives. Now, there are over 1.65 billion active iPhones across the globe.
The result of this innovation was a device that customers wanted to use. And it also inspired companies of all kinds, not just those in consumer tech, to explore new ways to innovate to deliver exceptional products, services, and customer experiences.
First, what is digital innovation?
At its core, digital innovation is the practice of implementing modern digital technology to solve business problems by optimizing processes, improving customer experiences, and delivering new business models.
Wearable devices, chatbots, IoT, AI, big data, etc. — we are surrounded by digital innovation. Business adoption of these new technologies can include:
- An augmented reality-driven app that shop floor workers use to check temperatures and prevent machines from overheating
- A healthcare company implementing AI to help better diagnose patients’ ailments
- Digitalizing and integrating data from disparate sources for complete, timely reporting
Here’s an example of digital innovation in action:
For quick-service pizza chain Domino’s, innovation came from improving its app. About 70% of customers were placing orders through the app, but it still relied on face-to-face pickup.
When Covid-19 made it difficult for customers to pick up their orders, Domino’s looked at its existing products, like its mobile app, and decided to build on it so customers could place orders and receive contactless delivery.
This innovation paid off. By addressing a key pain point for customers, It made it easier and safer for them to get what they wanted: a toasty pizza with a side of cheesy bread. With this innovation, mobile-app orders increased to 80% — the highest the company had ever seen.
This is a great example of digital business innovation. It involves the application of digital technology to improve operational efficiency, ultimately increasing customer engagement. Part of the reason for Domino’s success is the right fit between digital business innovation and the company’s digital strategy. Looking for more context?
Why is digital innovation important?
There is a digital component in almost every facet of human activity, be it for work or personal consumption. We see digital innovation around us every day when we call a Lyft or when we book a travel stay using Airbnb.
Organizations can risk becoming irrelevant if they don’t digitally innovate or adapt to evolving consumer and business habits. In fact, Foundry reports that 89% of organizations plan to adopt a digital-first business strategy. In an age when building enterprise web and mobile applications no longer requires months or years of writing lengthy complex codes, it’s a simple case of disrupt or be disrupted.
Who is digital innovation for?
Regardless of the industry and size, digital innovation is for every business looking to remain competitive and profitable by building products and services that consumers love.
At the functional level, creating business applications is no longer the sole domain of IT. In fact, with innovative platforms like low-code, business users in HR, marketing, operations, finance, and any other department can build modern applications.
Digital innovation vs. digital transformation
Digital transformation is an ongoing process to transform and improve business performance by changing the way a company thinks and operates. Unlike common perception, digital transformation isn’t only about the technology you adopt, but also involves people, processes, and a portfolio.
Digital innovation (or digital business innovation) is that spark of creativity that leads to the development of new technology or innovative applications of existing digital tech. Digital innovation is often the precursor to digital transformation.
Let’s go back to the Domino’s example. Back in 2017, the company started digitally innovating by building an omnichannel strategy that lets pizza lovers place orders on multiple platforms by utilizing chatbot technology and AI. Pretty neat, right? Now, all customers had to do was send a pizza emoji 🍕 through Facebook Messenger and Domino’s would receive their order.
Except, of course, there was more to it than that. In order to make the most of this technology, Domino’s had to digitally transform its internal processes. It had to integrate all of its databases — and therefore customer information — in order to save time and automate the process. While the customer may see only a pizza emoji (and then the real thing), there is so much more happening behind the scenes.
3 focus areas for your digital innovation strategy
Domino’s innovation was driven by changes in the process as well as the technology. People and process are a key, but often overlooked, part of digital innovation strategy. Now that you know what digital innovation is, how do you implement it? A successful digital innovation strategy requires focusing on three different areas:
- customer, partner, or supplier engagement
- product and service innovation
- internal systems processing, reporting, or access
1. Customer, partner, or supplier engagement
Convenience is the name of the game here. How can you make it easier for your customers or suppliers to engage with your product? For many companies, applications can help them achieve this goal. Apps
that support this goal include advisement tools, fact-finding assistance for employees, and customer portals may help. Take the insurance industry. Customers are looking for more digital solutions when interacting with insurance companies.
IBM found that 38% of customers want virtual assistants to help them with self-service tasks, yet only a fraction of insurance companies (16%) use and support virtual assistants. And a staggering 75% of customers want to see new technologies incorporated into the companies they work with.
It may not be enough for insurance companies to offer stellar customer service over the phone or through chat. Companies may need to look for new ways to engage with their customers. That’s what Zurich Insurance did. While it already had a multi-channel approach, it developed a digital innovation strategy that focused on customer centricity.
2. Product and service innovation
Differentiating your business — whether by enhancing existing products and services with digital components or even creating net new products or services — is another key way to implement a digital innovation strategy. Product and service innovation often involves new applications that enable mobile services, personalized product offerings, and new business models.
As part of its focus on customer centricity, Zurich created FaceQuote, an app that uses facial recognition technology, to help its customers quickly get an estimate for a life insurance policy. This innovated an existing (and time-consuming) process.
All customers had to do was take a selfie using the company’s app. Using low-code, Zurich was able to develop the app in just one week. The app was able to estimate a customer’s age, based on their selfie, and could offer a quote. Once a customer received their estimate, they were also given a link to a full life application tool.
3. Internal systems processing, reporting, or access
No matter how good an app is, if the processes aren’t in place to support it, it may not be as good as it could be. Digitizing your back-office processes can improve efficiency, ultimately reducing the cost of service and support while improving response times and customer satisfaction. Consider how you can automate complex internal workflows, enable faster reporting and decision making, and empower your workforce through new applications that enable better access to data and better mobility.
In Zurich’s case, the company did this using low-code and an agile workflow with its team, allowing them to move quickly. The results speak for themselves: Over the course of a year, Zurich Insurance processed 63,000 life insurance quotes.
End-to-end solutions are key to digital innovation
At the functional level, creating business applications is no longer just the domain of IT. In fact, with innovative platforms like low-code, business users in HR, marketing, operations, finance, and other departments can now start making applications.
You may notice one thing these three areas have in common: They incorporate end-to-end solutions. An off-the-shelf solution — like a third-party app — can bring unexpected complications and extra time investment. But an end-to-end solution allows a company to own the entire process. In addition to that, it offers several benefits:
- reduces redundancy and costs
- avoids the headache of integrating multiple solutions that may not work well together
- increased automation, creating more productivity
- improved data security
It can be hard to implement a digital innovation strategy if you’re working with a patchwork of multiple softwares that don’t integrate. This patchwork may have worked for a smaller operation or project, but as a project gets bigger, it may unravel.
How to kick off your digital innovation initiatives
More and more organizations are creating innovation labs, or fast-track teams, that act as incubators within their enterprises. These groups provide a fast lane through the business to accelerate the delivery of applications that tie into digital innovation initiatives. But accelerating end-to-end results requires the right people, process, portfolio, and platform. Here are a few tips to get you started.
Select two to three people from across business and IT teams who are passionate about delivering business value. No more large-scale teams, just a small group of highly focused people who can collaborate to find digital solutions to complex business challenges.
Leverage an agile, iterative process to drive innovation without disrupting existing operations or development efforts. By continuously iterating toward the perfect solution, you can release new digital functionality more frequently, show progress, and collect more market feedback (which then can be actioned more quickly through additional development sprints).
Creating a project portfolio of quick wins and high-value initiatives allows you to realize immediate success and create a wow factor, while high-value initiatives justify broader organizational change — especially when the applications are tied to relevant strategic initiatives.
Find the right technology to empower your people and reinforce your process. Look for a unified platform that manages the entire application lifecycle, including program management, team collaboration, rapid application development, instant cloud deployment, and application management.
How low-code development empowers digital innovation
We’re now living in the age of digital Darwinism, where businesses must choose between evolving or becoming irrelevant.
But low-code development is revolutionizing the way businesses build mobile and web applications. A low-code platform like Mendix acts as a catalyst that transforms emerging technology like AR/VR, IoT, AI, and machine learning into business solutions for real-world problems. Learn more about what you can make with low-code or contact us to get started.