Valuing digitization alongside innovation

We all see around us increasing disruption caused by digitalization. The powerful effects of digitalization are opening up different business opportunities, the chance to design different business models and get far closer to the ultimate need, to understand the customers wishes from the products and services they are wanting to buy.

We are seeing a very distinctive advantage in embracing digitalization into innovation. The potential of combining digitalization and innovation insights offers significantly more potential for sustaining growth and building a greater connection into the needs of our customers.

Much of our innovation work today is caught up in out-of-date information, poor and inadequate data, restricted research and limited market understanding. Our innovation insights are badly lagging, with the effect being the solutions offered are not ‘tuned’ into the present and anticipated needs, as they often lack dynamic data. We need to digitize our innovation activities fully.

We need to ditch much of our existing innovation processes and practices, reliant on manual systems and so often trapped in silos of knowledge. Digitalizing innovation processes can potentially liberate us from ‘second-guessing’ customer needs and connect us into real-time understanding. This being ‘digitally connected’ can provide the catalyst to a greater level of innovative solutions that are far more aligned to customer and market needs.

Why does the combination of digitalization and innovation have such a transforming effect?

The need for speed has become paramount in responding to market changes.

We need to increasingly find time to shorten our time to market yet there is this increasing complexity in our products we are designing. They are more connected, embodied and closer to what the customer expects. We have running shoes that can track our fitness, we can monitor our health through connected technology and we can build up personal conversations with our customers. These all rely on connected technology.

All this new complexity challenges the speed to the market concept. To overcome this we are reaching out and working more on platforms of collaborators and building up ecosystems of like-minded solution providers to jointly come to market with products that have technology designed into them

The increasing need to build-in flexibility

The pressures are to gain increased flexibility by personalizing products to fit individuals needs and that requires some radical redesigns of the supply chain and manufacturing process. The final personalization has been pushed further down the production line, closer to the final product. This has required major redesigns in the design of the manufacturing process to enable it to become more flexible. We are automating the plants far more so the “change over” is at a push of a switch and the pre-programmed software directs the robot to alter their routine.

We also have far more “responsive supply chains that are fully visible and adaptive to demand and directing the finished product to the appropriate distribution channels. By automating demand throughout the process we can reconfigure and reorganize manufacturing closer to demand, this shortening down the response time between a customer ordering and receiving the good. These fully integrated manufacturing and supply chains are increasingly reliant on a dedicated ecosystem of partners, all working towards shortening response time and delivering to customer needs, as quickly as possible.

Focusing on improving quality

Automation has become essential to lifting up and maintaining the consistency of quality, combined with being more responsive. The potential in fixed, programmable and flexible automation, provides options simply impossible, in past manufacturing. Automation is improving quality in so many ways that are helping to eliminate human error, allow for greater consistency and accuracy. This automating the process is giving us the flexibility and new capabilities to create more complex goods. We can identify far more errors quicker, thereby pushing production into a high-quality cycle that is delivering quality consistently in the finished product.

Also, the introduction of robots has significantly lifted the level of quality. The level of mistakes drops, the automation of the process allows for a highly repetitive process and digitalization and advanced technological solutions are delivering the consistency of quality, right away and every time. This ‘allows’ the innovation to be valued, as industrial automation yields increased safety, reliability, and profitability. Digitalizing the process allows for Smart Manufacturing that is giving us the ability to solve existing and future problems, via an open connected infrastructure that is highly visible and responsive. Having the environment where digital connects up everything and everybody, this has the potential that allows solutions to be implemented at the speed of business, visualized, assessed and modeled, to allow for increasing responsive rates of change, creating an advantage in new value opportunities.

We are seeing increasing efficiency  

The ability to think more about the environment and design the product as more sustainable has risen in everybody’s thinking as a real market need to focus upon. The concept of product lifecycle has added more meaning and value as the product need needs extending and having more opportunities to extend life through upgrades, revisions, add-ons, etc. We have a much higher level of awareness of the progress through a sequence of stages from introduction to growth, maturity, and decline and by combining the use of digital and innovation enables that far more. Products that can be upgraded through software upgrades add greater “service” value.

Technology can extend products or services by upgrading the software, by changing the composition of the product. Within this digitalization is enabling more monitoring of efficiency in the use of material, in product and as this has a huge *thumbs-up” with many of the customers the ability to reduce the environmental impact, is yielding real competitive advantages. As manufacturers manage the lifecycle it opens up more options for innovation. As we learn to proactively manage products throughout their lifetime, applying the appropriate innovative solutions, depending on what stage products are at in the cycle we can leverage more options within our innovation activities.

Digitalization is allowing for new business models

The ability to generate, collect and analyze appropriate data the more trends can be spotted, engagements with customers made, and investigations and evaluations analysed, to clarify their usage, needs, and feedbacks. As we record and exploit data, we can open up that data and reconfigure it into different “what ‘if’s” or come across new nuggets of opportunity, that can give rise to potential new business opportunities. To often deliver to these new concepts you need to redesign supply chains, change product specification that makes them different from existing business models in channels of delivery, value offerings or pricing options. Digitalization has combined with innovation to make product and services more dynamic.

The more you develop new, data-based business models the more you can explore alternatives in product design, and delivery.  Imagine how Airbnb crunches data and learns trends, demand and destination needs. This valuable information can be sold to the travel agents to tailor packages that meet this demand.

Increased protection and security

There is a growing fear that as we increasingly rely on digitalization, we are opening ourselves up for some level of cyber-attack. Realistically that will happen from all indications but we need to prepare for this. Not digitalizing is holding back progress. We have to be ready for this often-daily occurrence in our institutions, on our banks and security, at all key locations where people and machines can be vulnerable.

Business organizations must continue to protect their strategic assets, defend their intellectual property today and in the future. Although this has a huge cost in compliance with the cost of downtime, or attacks that make a business vulnerable has a much higher cost. Digitalization has downsides but it also has higher ones in this increased protection and security in a world where we all are feeling increasingly vulnerable.  We look to being protected, not just in the technology reliance within our lives but for our physical well-being. The ones that provide this assurance or confirm they are taking necessary precautions to gain far more from customers feeling re-assured. As we increasingly rely on our data, it becomes central to our innovation insights and essential to customers feeling confident in their protection and security, in their investments in product and services. You build a circle of trust.

Each of these changes from digitalizing has a positive impact on our innovation activities

We have distinctive ways to treat data and digitalization that leads to distinct new value points for innovation and the IBM Institute for Business Value identified five distinct opportunities where digital innovation provides additional value:

1. We gain new insights that augment products and change our thinking by the generation of real-time or constant flows of market and customer-driven data
2. We improve our assets by digitalizing them. We can connect up machines, whole plants and complete organizations can be designed around the flows of data. This has an enormous impact on the potential to collaborate, to liaise, learn and build from this data, a new fresh knowledge insight. This can trigger ideas and new concepts to be evaluated as well as gain from having full oversight over the assets generating data or that coming into the company.
3. The ability today is to combine data within and across different industries. Within our move towards platforms and ecosystems the exchange of data allows for a “greater whole” to view it, add insights and knowledge and from this combined effect those within the ecosystem can gain a commercial and competitive advantage to build appropriate products, services, and business models in response
4. Each party is building up its own data. We are in times where trading data has become a highly valuable new source of revenue. Knowing weather patterns helps farmers, utility and those dependent on delivery to know and plan far better. We can trade audience data, interest in articles or newsworthy stories so others can associate with these to build more of a profile of who is engaged so they can offer products and services more tailored to their possible needs. The business of trading data is the new oil in the economy
5. Lastly, we can begin to organize data into more distinctive patterns, service capability options and build more sustainable systems where you build increasingly an accepted language that becomes codified in some way that gives new value. We can systemize thinking through data that allows for uniformity and allows multiple systems to exchange and see patterns. This is where algorithms have increased value. They can predict change.

Each of these new ways to use the evolution of digitalization to add completely different levels of innovation potential. Seeing this value is one thing, achieving the connecting aspects it requires is another.

Innovation and digitalization are as powerful as innovation and knowledge in their combination. They both combine to give new insights, new options to generate significant new and greater value. The sooner we can bring in digital solutions and processes into the innovation process, the better to realize some of the real potentials that this combination can give us, as fresh opportunities to add new value

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