What is digital innovation?
Definition: Digital Innovation means innovating products, processes, or business models using digital platforms as a means or end within and across organizations.
Digital innovation is made up of the following characteristics;
- Digitising information, which enables information to be transformed, transmitted and be accessible from digital devices.
- Digital information is editable enabling malleable digital solutions which can be continuously changed and enhanced.
- Digital solutions are self-referential which results in digital solutions inspire new digital solutions, a process of digital innovation of business models that are scalable, have low barriers to entry and encouraging wide participation.
Research shows a strong correlation between new product development and market performance, in terms of organisations capturing and retaining market share, increasing profitability, reduce costs and achieve economies of scale etc. But, it is important to bear in mind that innovation-driven competitive advantages are usually short-lived as gains tend to be copied or lost due to new disruptive technologies and business models. Hence the need for continuous innovation that are not that easy to copy such as patented technologies, process innovations and hidden innovations.
Studies have shown that ‘innovation leaders’ in most industry sectors consistently outperform their rivals in revenue growth, profits, and share price performance.
Innovation is the process of turning opportunity into ideas and of successful implementation of these ideas to achieve a commercial improvement or advancement.
Strategic advantages of innovation
- Frees up resources from mundane activites and enables them to focus on value add functions.
- Modernises legacy processes and systems
- Customer focused business
- Enabling new business models
- Continued competitiveness
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There are generally four types of organisations in terms of innovation capability:
- Those that are unaware – not able to pick up signals quickly; unconscious of the need to change
- Those that are reactive – able to respond to the external threats, but not to create opportunities
- Those that are strategic – capable of executing a strategy of continuous innovation; unprepared for disruptive changes
- Those that are creative – proactive approach to building and sustaining competitive advantage
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