The role of innovation in digital transformation AscentCore blogpost

The Role of Innovation in Digital Transformation

Digital transformation is a phrase that has been on the lips of business leaders for years now, and its importance has evolved over time. Once a concept that enterprises thought might be a passing fad, it has become a must-do to stay relevant. But that relevancy doesn’t make it any less of a daunting endeavor. Where do enterprises start on a digital transformation journey? Buckle your seat belt as we embark on the road to digital transformation with our first stop: Innovation as a Pillar of Digital Transformation

Innovation Driving Digital Transformation

At its core, digital transformation implies change, and this change requires creativity, agility, and innovative thinking. Enterprises need to foster a culture that encourages their employees to think creatively, which means being open to experimenting with new technologies, business models, and prototyping ideas. 

Ultimately, innovation as part of digital transformation is not just about adopting new technologies. It’s about creatively leveraging these technologies to solve problems, improve processes, and create value. Ultimately, businesses looking to stay competitive, relevant, and profitable must find ways to keep up with ever-changing customer expectations and technological changes. In fact, 84% of executives believe innovation is essential for growth, but only 6% of them are satisfied with their innovation performance. So we know innovation is critical, but we’re less sure how to innovate well.

Why Innovation Matters

Understanding why innovation matters in the context of business and digital transformation is key. Let’s explore how innovation acts as a catalyst for enterprises on their digital transformation journey.

  • Technology Integration: Digital transformation requires legacy technology to play nicely with new tech. Innovation allows for the seamless integration of emerging technologies like AI, ML, IoT, and blockchain into existing workflows and processes. While some old software may need to be updated or replaced, finding new ways to integrate technology can lead to improved efficiency, better decision-making, and new opportunities for growth.
  • Problem Solving: There is no doubt that with digital transformation comes problems. In fact, if an enterprise is looking at a digital transformation strategy, odds are that pain points and inefficiencies have already been identified.  “Thinking outside the box,” however cliche that may sound, will be key to solving problems we haven’t encountered before. Teams will have to find innovative and novel ways to address these challenges and ensure they get the most bang for their digital transformation buck.
  • Customer-Centric Solutions: Remember, digital transformation isn’t just about internal enhancements; it’s also about enhancing customer experiences. Customer preferences and expectations change as rapidly as technology, so innovating systems and tools for meeting customer needs is key. Innovation allows companies to create more personalized, intuitive, and efficient solutions that cater directly to customer needs and preferences.
  • Continuous Improvement: There are few things in this world that we can use a “one and done” approach with and expect great results, and digital transformation is one of them. There will always be opportunities to learn, grow, and get better, which means that innovation is an ongoing process, not just a component of one project. True innovation requires fostering an environment that encourages continuous improvement and experimentation. This might involve rapid prototyping, testing new ideas, and learning from failures to refine and evolve strategies.
  • Agility and Adaptability: We live in a world of nonstop change, which requires adaptability and agility for businesses to keep up. Fortunately, fostering a culture of innovation lends itself to a business developing these skills. It enables businesses to respond quickly to changing market demands, customer preferences, and technological advancements.

Insights into Innovation

So innovation is good for businesses. But how do they “get” innovative? Focusing on innovation as a pillar of digital transformation requires an intentional and thoughtful approach to get real results. Approaching innovation haphazardly and testing out random ideas is a good way to waste time and money and not improve anything. 

This is where an innovation strategy comes in. An innovation strategy serves as a blueprint for enterprises to intentionally foster and leverage innovation. It should include a plan outlining how the business will allocate resources, identify opportunities, and create processes to support innovation. This strategy ensures a business isn’t innovating for the sake of it but aligns with business and digital transformation goals. 

What Does Innovation Look Like?

“I know it when I see it” is a popular refrain when we can’t fully define a concept or idea. When it comes to innovation, the best way to describe it is to see it. Let’s look at a few examples of innovation done well. 

  • Repackaging furniture. Selling disassembled furniture in a flat box now seems like old hat. And that’s because Ikea revolutionized the furniture game by allowing customers to transport and assemble furniture easily. It not only reduced cost (resulting in lower prices for customers) but also enhanced the overall customer experience by eliminating pushy salespeople and waiting months for furniture to arrive.
  • An innovative approach to innovation. Innovation can sometimes lead to huge transformations that don’t always pay off. But rather than taking on radical (and risky) transformation, Japanese car maker Toyota uses a philosophy called kaizen. This approach allows them to focus on innovative changes that compound over time. This continuous improvement approach has allowed Toyota to stay highly competitive while still introducing innovations in fuel efficiency, manufacturing processes, and vehicle safety.
  • Super-customer service. AirBnB has revolutionized the hospitality industry with its peer-to-peer model of renting homes, apartments, and even treehouses. And in addition to that, it has innovated processes that have taken customer experience to the next level. The reviews written by real guests are a cornerstone of their business and build trust in what could otherwise be a sketchy transaction. Instant bookings have streamlined the reservation process, and their “Enhanced Clean” program helps alleviate any health and safety concerns, which is particularly important in a COVID world. 

Keep Innovating

Ultimately, innovation can act as a catalyst in the digital transformation journey. It enables enterprises to adopt new technologies and change how they operate, create value, and interact with customers and stakeholders. But creating a culture of innovation doesn’t happen overnight. It requires planning, thoughtfulness, and strategy to ensure it helps businesses meet and even exceed their digital transformation goals.


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