The world progresses when innovation flourishes. As my friend Thomas P.M. Barnett likes to say, “The Stone Age didn’t end because the world ran out of rocks.” It ended because people created better technology. The latest “Age” is the Digital Age and analysts from the Boston Consulting Group (BCG) note, “The pandemic has put the power of digital on full display.”[1] Companies that weren’t born digital, they note, are racing to become digital. They further observe, “Many business leaders had already launched ambitious digital initiatives before 2020, but now they feel a renewed sense of urgency. They are doubling down with a sharper vision and a direct call to seize the opportunity.” This sense of urgency results from the nagging belief that non-digital-native companies are playing a game of catch-up or die. The late Steve Jobs is credited with stating, “Innovation distinguishes between a leader and a follower.” I know of no company that proudly sells itself as a great follower.
To become a leader in the Digital Age, BCG analysts suggest companies should answer the following questions: How do we build a new set of capabilities to harness digital innovation and create new competitive advantage in our core business? How do we push innovation out of the lab and into the hands of our frontline teams? How do we adopt new ways of working that enable us to move at digital speed? How do we attract and retain the next generation of digital-native talent? How do we drive and sustain innovation velocity across our entire organization? Here’s the rub. McKinsey & Company analysts assert, “It’s no secret: innovation is difficult for well-established companies. By and large, they are better executors than innovators, and most succeed less through game-changing creativity than by optimizing their existing businesses.”[2] This assertion begs the question: Can established companies innovate in the Digital Age?
Innovation at the speed of business
The Digital Age has greatly increased the speed at which companies conduct business. Chris Donato, Executive Vice President of North America Applications and Consulting for Oracle Americas, insists, “The speed of technological change is faster than it has ever been and businesses that fall behind the trends can quickly lose market position and their competitive advantage.”[3] He adds, “Executives [must] understand what’s coming next and position their organizations to adopt and adapt.” As McKinsey analysts note, adopting, adapting, and innovating can be difficult for well-established companies. They have a difficult time following the motto used by Meta founder and CEO Mark Zuckerberg: “Move fast and break things.”
The good news, according to Hemant Taneja (@htaneja), Managing Partner at General Catalyst, is that the time to move fast and break things has ended. He believes companies that take a more deliberate approach to innovation (i.e., the companies that can execute better) will end up being winners in the Digital Age. He explains, “The technologies of tomorrow — genomics, blockchain, drones, AR/VR, 3D printing — will impact lives to an extent that will dwarf that of the technologies of the past ten years. At the same time, the public will continue to grow weary of perceived abuses by tech companies, and will favor businesses that address economic, social, and environmental problems. In short, the ‘move fast and break things’ era is over.”
These two factors — business speed has accelerated, but ethical execution is paramount — present businesses with a real conundrum when it comes to innovation. One of the ways companies are learning to deal with this conundrum is by leveraging the capabilities of cognitive technologies (aka artificial intelligence). Donato notes, “Now is a particularly good time to focus on technology. We have the benefit of lower cost, very accessible compute resources matched together with plentiful data that can be analyzed using artificial intelligence and machine learning. The net result is truly enriched processes that allow you to deliver the best possible outcomes for your employees and your customers.” At the same, Taneja notes, you should ask, “What’s your framework for leveraging data and AI responsibly?
AI and innovation
Robert Weißgraeber (@robert_we), CTO and Managing Director at AX Semantics, writes, “Businesses are now focused on what’s next.”[5] And he believes AI and machine learning (ML) will play an essential role in helping drive what’s next. He concludes, “AI and ML technologies are more than buzzwords or simple predictions: They offer businesses limitless possibilities to evolve use cases to improve productivity, expand their customer base, boost ROI and grow their bottom line.” Although many articles focus on how AI and ML can boost business innovation, Naveen Joshi (@joshinav), Founder and CEO of Allerin, reminds us that cognitive technologies are impacting scientific discoveries as well. “Artificial intelligence is assisting humans in making new scientific breakthroughs,” he writes. “The AI revolution in science is helping scientists to minimize the time between forming of hypotheses and getting results, so that technological progress can be accelerated further.”[6] He concludes, “The AI revolution in science to will catalyze humanity’s collective effort to understand the world around us and to create technological tools to make our lives better.”
Scientific discoveries often find commercial applications. Smart business executives ensure their companies know about the latest discoveries and explore ways to use them to innovate their goods and services. The same algorithms helping science advance are also helping businesses advance. As science reporter Benedict Carey notes, “Machine-learning algorithms seem to have insinuated their way into every human activity short of toenail clipping and dog washing, although the tech giants may have solutions in the works for both.”[7] Of course, even extensive use of AI and ML can’t guarantee success. As the McKinsey analysts observe, “There’s no proven formula for success, particularly when it comes to innovation.” But companies need all the help they can get and AI and ML are the Digital Age’s best tools. AI can quickly generate insights that humans might overlook. McKinsey analysts note, “Innovation requires actionable and differentiated insights — the kind that excite customers and bring new categories and markets into being.”
Concluding Thoughts
McKinsey analysts suggest that, even when leveraging cognitive technologies, the best way to “look for insights [is] by methodically and systematically scrutinizing three areas: a valuable problem to solve, a technology that enables a solution, and a business model that generates money from it.” They conclude, “Nearly every successful innovation occurs at the intersection of these three elements. Companies that effectively collect, synthesize, and ‘collide’ them stand the highest probability of success.” AI can help; especially, when it comes to iteration. The McKinsey analysts conclude, “Discovery is iterative, and the active use of prototypes can help companies continue to learn as they develop, test, validate, and refine their innovations.”
At the same time, executives need to understand that innovation involves more than technology. Ravin Jesuthasan (@RavinJesuthasan), global leader for transformation services at Mercer, suggests corporate culture and people also play a big role. In the Digital Age, however, getting the technology right is essential. Jesuthasan concludes, “[Organizations that] are continuously experimenting with emerging technologies are the ones who are the most agile and the ones who are able to proactively anticipate and deal with how technology is going to evolve the work equation.”[8]
Footnotes
[1] Charles Gildehaus, David Allred, Euvin Naidoo, and Anil Podduturi, “Powering the Innovation Flywheel in the Digital Era,” Boston Consulting Group, 12 March 2021.
[2] Marc de Jong, Nathan Marston, and Erik Roth, “The eight essentials of innovation,” McKinsey & Company, 1 April 2015.
[3] Chris Donato, “Moving at the Speed of Business,” Oracle Cloud Applications Blog, 19 November 2020.
[4] Hemant Taneja, “The Era of ‘Move Fast and Break Things’ Is Over,” Harvard Business Review, 22 January 2019.
[5] Robert Weißgraeber, “Four Ways AI And Machine Learning Will Drive Future Innovation And Change,” Forbes, 18 February 2021.
[6] Naveen Joshi, “When the Invention Becomes the Inventor: How AI is Making Inroads in Scientific Discovery and Innovation,” BBN Times, 18 June 2021.
[7] Benedict Carey, “Need a Hypothesis? This A.I. Has One,” The New York Times, 24 November 2021.
[8] Katie Malone, “Emerging technology can drive innovation — if people come first,” CIO Dive, 18 February 2021.
