The Definitive Guide to Digital Innovation for CEOs Innovating in the digital space of the new normal requires a different approach than what you may be used to.
Opinions expressed by Entrepreneur contributors are their own.
If you want to do digital innovation the right way with your business, imagine yourself on the pickleball court. At first, you'd probably look at the net, ball and racket and think, "This is the same as tennis. I've got this!"
But pickleball is not like tennis. Sure, it's similar, but the rackets are different, the net and court are both smaller, and the ball is much lighter. When the game begins, you'll realize that your assumptions cost you the advantage and may have even determined the outcome before you ever had a chance.
Innovating in the digital space is like this, too. Based on past experience with technology implementations, you may think you already know what's needed or what can be controlled — even when confronted with new situations. But there are fundamental differences that can throw you for a loop and require a new approach, especially when it comes to customer-facing experiences. In terms of digital innovation, this means putting less emphasis on your tools.
The core problem
Today's world is fast-paced. People are creating new technologies and experiences all the time, and there are many entrants in every sector. Thousands of new ideas are introduced in the marketplace every day and then copied across industry segments. Every day, businesses are making changes and taking chances that could lead to the next large-scale disruption.
The recent change to Nike's business model makes for a good case study. The company has always put enormous pressure on retailers to provide a differentiated experience to the customer, and now they're cutting ties with those who can't or won't. They won't be selling through places like Amazon, DSW or Macy's anymore, choosing instead to go directly to their consumers.
How is this going to impact Nike's sales and distribution? Will it set a trend for other heavyweights to follow? Will retailers retaliate in some shape or form? This is just one small example of how unpredictable and uncertain the landscape is these days. No one knows what's going to happen next, not even a trendsetter like Nike, and that represents a massive shift.
Many businesses continue to operate as if they are still in the 20th century, when predicting what would happen in three to five years' time wasn't so difficult. It's not just that it got harder to predict target states — having to work harder to analyze all possible options to come up with a winning strategy. It's that it got exponentially harder, rendering the work of analyzing all options practically impossible. There are so many variables — and so many relationships between those variables — to be analyzed, that doing so thoroughly almost always means missing the window of opportunity for action. By the time you go to market with your carefully studied, best course of action, the scenario has changed entirely. In other words, the future is not knowable anymore, and it doesn't matter how hard you try or how big you are.
That's no small change. Executives and companies have long built their success on knowing. It requires a lot of courage to acknowledge that we don't know and a lot of wisdom to accept that it's okay to not know — to be comfortable being uncomfortable. It's probably the toughest and most crucial step in the transformation journey to becoming a relevant organization in the 21st century.
Unfortunately, traditional businesses really aren't set up to accommodate this, and managing change and innovation can be excruciatingly slow. As an example, let's say that you need a new direct-to-consumer experience. You can create a beautifully organized, data-rich, 60-page document that lays out the business case for the system. That research, preparation, and mainly alignment among all internal functions about what to do will most likely take several months, and it's just an intermediate step in the process. In the end, it takes about six to nine months just to approve and align around the idea and many more months (often years) to execute it.
To make matters worse, businesses often take a "beauty contest" attitude when they look at ideas, with office politics leading to some concepts looking "prettier" than others and winning out. Different departments can fight with each other about what the "right" solution is, which slows down approvals or next steps. Politics can also make digital innovation financially wasteful, with other people inflating or adding to projects instead of investing in the pure, original idea as is.
Related: Overcoming Challenges On The Road To Digital Transformation
Playing smarter
Handling digital innovation really well requires shifting your mentality. The biggest concern isn't the specific technologies or tools you have, it's whether you're creating an infrastructure and set of processes that deal well with the uncertainty and unpredictability of the external environment, allowing you to get more from your investments and take calculated risks.
Learn to think like a venture capitalist. These people don't usually throw all of their money into one company or idea. Instead, they spread investments out to many different businesses that can prove they are bringing value or have the potential to do so. In the same way, instead of putting $20 million toward one big idea, you can invest that same $20 million in 50, or even 100, different smaller ideas, test them, and keep funding just the ones that actually work.
From a practical standpoint, a venture capitalist-style approach to digital innovation means that you have to empower your teams. Increasing their autonomy allows them to work faster, since, as we've seen, the step-by-step approval method comes at a huge time cost. In turn, this means differentiating between effective and ineffective solutions at an increased rate, allowing for more iterations in a smaller time frame.
This doesn't mean they won't benefit from oversight. This is where it's important to create growth boards. The people on these committees don't take control of projects away from their teams; instead, board members track progress and key metrics to ensure that the ideas are getting traction with customers. If they're not, they are unceremoniously shut down and resources are moved to the next idea. With a big-picture view, they're well-situated to point out which investments deserve to be cut, kept or scaled up.
Related: How Entrepreneurs Are Capitalising on Digital Transformation in the Age of the 'New Normal'
To win big, think small
Business has never moved faster than it does today, and along with that comes unpredictability. The snail-paced, bureaucratic standards that have traditionally dominated in enterprise are a poor fit for this environment. From the outside, things may not look so different, but like pickleball, it's a completely different game. Successful digital innovation requires a new way of thinking and doing, and in general, this means doing more by thinking smaller. With old-school assumptions out of the way and empowered teams driving your business, you'll be poised to lead the charge of modern companies into the future of commerce.
