Need a ride home and don’t have a car? These days, you can just pull out your phone and request an Uber or Lyft to take you home. Of course, this wasn’t always the case. When Uber and other ride-sharing competitors came onto the scene, they disrupted a whole industry. They made it more convenient to find transportation home, causing many to stop using taxis. You don't have to sit on hold waiting for a taxi to pick you up and don't have to worry about digging for your credit card or cash to pay the driver. It also decreases the awkward exchange of having the driver there when you figure out how much to tip.
Besides the transportation industry, the application-led business model has already started affecting other fields including grocery shopping, laundry, legal services, and even medicine. According to Forbes, “we are now at the cusp of a similar revolutionary transition in the trucking industry with Uber for truck-type apps entering the market, but this time the competition will be high and the solutions a lot more fragmented.” These technological disruptions have always happened, but are occurring more frequently as more advancements are made. Companies like Kodak and Blockbuster have suffered by not taking into account changing user needs and technology. If older companies aren’t careful, they could be surpassed by these startups and other technological disruptions.
How can companies keep up with all these technological advancements and startups? They need to create and execute a digital innovation strategy.
Creating A Digital Innovation Strategy
What exactly is a digital innovation strategy? It’s a strategy to transform to a digital business. With so many technological changes, companies have to create a digital innovation strategy to stay competitive. They need the right tools and framework to support themselves when managing digital innovation processes.
According to the Swedish Center for Digital Innovation, “While digital innovation is a means for new entrants to leverage digital technology in order to challenge incumbent firms—ultimately causing radical industry-level transformation—it also provides opportunities for incumbent firms to enhance and expand their product and service portfolios into new domains.”
Companies that invest in innovation survive. The key is to generate the innovations within your company to insulate yourself from the market disruptions and cycles. According to Moore’s law, technology doubles every two years and is now being applied to business models. The businesses that develop products and adapt business lines to these changes will survive.
A piece of advice: Companies should not set out to map what products and strategies these new technologies will bring, but rather, how to synthesize concepts across disciplines to capitalize on the new technologies and stay ahead of competitive threats. In addition, in order to create a successful framework for a digital innovation strategy, companies will need to get user insights and conduct ethnographic research. This information will help power the design of the user experience and lead to more successful products.
Of course, with any new implementation of a strategy, people will feel the effects. Implementing a digital innovation strategy catalyzes major process and cultural changes. You’ll need to be deliberate with your strategy and keep the context of the company’s stage toward digital innovation in mind. Soon, companies will move from treating information technology as a service function and cost center into seeing it as a business enabler and agile response to competitive threats.
Why Your Strategy Matters
As you can see from the examples earlier, businesses today are facing new threats all the time from technological disruptions. Don’t let your company fall behind. Remember to develop an innovation strategy that fits your company’s culture and company. By putting a digital innovation strategy in place, companies will have a better chance at competing against current competitors and startups.