Innovation Management & Digitization
Updated: Apr 6, 2021
Dear Reader, I can see a change of trend when working with customers on their innovation management journey.
At the start of this century Innovation Management was defined as an Idea to Market process, very much a process owned by R&D. The process is mostly called the NPD or NPI process. Companies tried to align the different business functions on new product investments, in fact on how to spend the R&D budgets in the most effective way, in order to achieve a good ROI. Many companies still use these process concepts.
However, since a couple of years Innovation and consequently Innovation Management have shifted from R&D focus to Company focus: Innovation is high on the agenda of the C level for a variety of reasons. I mention some:
The financial markets value companies with more criteria than revenue and turnover, growth; the markets look for confidence in the innovation strategies of companies, they want to see how companies try to be competitive in a fast moving world, with many paradigm shifts.
There are 2 major paradigm shifts for companies:
companies cannot bring to the market anymore products that are bad for the environment, have a bad carbon footprint; “green” is the new imperative, and
products have to be smarter and smarter, consumers demand devices with autonomy functions, demand ease of use like they have in their smart phones.
Digitization is a Must Have. Here I don’t mean the regular Automation (IT), but Industrial Automation, extended to the world of digitized products, marketing IoT applications, etc.
For companies it is matter of survival to implement the 2 strategies above, whereby Digitization is not only a goal in itself but also one of the major means to solve the big Sustainability challenge. One cannot solve the Sustainability problem without Digitization. In other words Digitization regards more than smart products.
Digitization is a CORE Competence
Without Digitization we cannot create smart products, without Digitization we cannot create green products, and without Digitization we cannot realize green production, manufacturing. Today there is no Innovation without Digitization. Consequently there is no Innovation Management without a process encapsulating Digitization in it. Hence the title of this Blog: Innovation Management & Digitization. This is very different from the early days of Innovation Management.
A major difference is for example the way a company communicates, interacts with its customers today: the consumer is already used to the fact that their devices (phones, washing machines, cars, laptops, etc.) are upgraded and repaired remotely. Consumers agree quite easily that their device data are tapped and used for statistical analysis by the vendor and producer of the device. The legal relation between producer and consumer has changed. And this has a fundamental impact on companies as a whole: new business models, new marketing, branding, business case calculations, and new engineering, manufacturing and deployment methods, new licensing and contracting. ROI is still an important metric when evaluating investments, but how to get to the ROI changed a lot. The old way of looking at the process cannot be anymore, the business reality already changed.
Another major change that I observe is that Digitization is challenging the traditional functional organigram: the software function is new and each traditional company function is impacted by this function. Not only engineering and manufacturing where digitization started first (see Industry 4.0), but also marketing and branding, product management, QA, legal affairs, supply, sales support, after sales support. Each of these have to transform and digitize. IoT for example is not only a manufacturing value add, but also very key for product management, market insights, customer engagement, etc. So Digitization is more and more critical for companies to survive.
The challenge for company leaders is how to manage the Digitization across all functions and how to align the many stakeholders. That is why Innovation Management today is very much about managing this challenge, with new modernized methods.
More about these methods in my future Blogs.