Research

In The New Digital World, You Have to Win the “Technology-Enabled” Business Innovation Game

By Peter Moore, Feb 02, 2017

The connected customer wants a different customer journey

Technology-enabled innovation is not only disrupting the competitive landscape, it is redefining the user experience value proposition across a multitude of industries. It is also putting companies on notice that if you can’t successfully engage your customers in this new digitally mediated world you are on your way to being Uberized.

The five waves of digital disruption (social, mobile, cloud, data analytics and connected devices) are completely altering how people connect, communicate and discover information. What these individuals are looking for are “friction-free” user experiences that delight and inspire them. These new tools affect how customers make decisions which affect their entire customer journey which ultimately affects their customer lifetime value. Simply put, it defines the differences between the traditional customer and the new connected customer.

A Framework for Organizing and Implementing Technology-Enabled Business Innovations

In his book Escape Velocity – Free Your Company’s Future From The Pull Of the Past, my brother, Geoffrey Moore, put forth a three-part innovation framework that is designed to significantly increase the ROI on innovation investments. At the core of this framework are three distinct innovation playbooks (see chart above) that clearly define the mandate and desired outcome for each one. Here are the key diagnostic questions that clarify those mandates and outcomes:

  • Have we differentiated our offer enough to gain real competitive separation?
    • Have we created a truly unmatchable offer?
  • Have we neutralized offers with enhanced features from our reference competitors in a timely manner?
    • Have we gotten to good enough fast enough?
  • Have we optimized our opportunities for gains in resource utilization and cost reduction?
    • Have we reclaimed unproductive resources and redeployed them against differentiation or neutralization opportunities?

Why do so many companies fail to get the ROI they want from their portfolio of technology investments?

In a recent study on IT innovation, 90% of CIOs said that technology-driven innovation is crucial for achieving competitive advantage. Yet on average, just 14% of IT budgets are earmarked for innovation and only 23% of companies report very positive results from their IT innovation efforts.

The answer to the question above lies in the way companies approach innovation and why they struggle to turn good ideas into sustainable revenue producing products and services. First, they don’t distinguish between the different types of innovations and the outcomes they are designed to deliver. Second they manage all innovations with the same processes and tools which leads to multiple sources of waste and failed initiatives as the chart above highlights.

Two Rules of Thumb

There are two key rules of thumb that can keep you from making the mistakes many companies make and result in most innovation initiatives not achieving their desired goals and outcomes.

  1. Never tie differentiation and neutralization innovation programs to the same release schedule. Differentiation is all about how far while neutralization is all about how fast. Combining the two dumbs you down and slows you down.
  2. Best in class is appropriate for optimization innovations only. It is too low a mark for differentiation (goal is beyond class) and too high a mark for neutralization (goal is good enough).

A new approach to innovation calls for a new mindset and a new game plan

Regardless if it’s the CEO, The Chief Information Officer or the Chief Innovation Officer who is driving the innovation process, companies must approach things with a very different mindset and a different plan of attack:

  • They need to be very good at neutralizing competitive disruptions quickly and effectively.
  • They need to be relentless in identifying and redeploying trapped value in legacy systems and operating processes that sap the organization’s resources and forward momentum.
  • They need to be Darwinian in their prioritization and allocation of resources against any major disruptive technology business innovation and make sure they only fund one at a time.
  • They need to commit to rapid iterations of minimum viable products and services and make changes based on actual customer adoption and utilization metrics.
  • They need to constantly experiment and be willing to fail fast and learn fast.
  • They need to leverage the new portfolio of digital tools to create compelling and enduring customer experiences.
  • They need to harness the power of machine learning and A.I. to gain real-time insights into what’s working and what’s not working.

This blog originally appeared in One Step Ahead.

About the author

Author photo

Peter D. Moore is a business and IT strategy advisor specializing in helping companies manage for exponential revenue and net income growth in today’s economy. Over the past ten years, Mr. Moore has worked with CEO’s, CIO’s and other senior executives from Citigroup, Charles Schwab, Johnson & Johnson, Mead Westvaco, Microsoft, Tommy Hilfiger, SAP, SAS Institute and VMware.

Over the past several years he has collaborated with his brother Geoffrey Moore to develop new models and tools to enable companies to effectively compete in the new age of digital disruption. He has introduced a new 4 Zone Model to help CIOs and their senior leadership teams maximize the business value of IT within their organizations. Early client engagements include Amgen, Box, Clorox, FedEx, HP Enterprise, ICANN, Intuit, Molina Healthcare, UBER, SpaceX and Splunk.


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