Digital Innovation Strategy: Definition, Importance & Considerations

Digital innovation is considered as a priority for most of the companies, but designing tactics to hit the right targets is hard. Moreover, many companies even have set up their own digital units (DUs) to tackle the challenges of digitalization. Let’s discuss three important aspects that are worth considering when designing a digital innovation strategy that works.

What Is a Digital Innovation Strategy?

A digital innovation strategy aims to transform your business into a digital business through implementing emerging digital technologies. Digital innovation thus becomes the core of the business strategy and is used to solve existing or future challenges, keep up with technological changes and gain a competitive advantage in the long run.

Why Is Having a Digital Innovation Strategy Important?

Digital innovation helps companies of all sizes and industries make processes across the enterprise more efficient, serve new customer needs, improve the customer experience, and, in turn, increase profitability and future viability. By having a continuous and systematic process for implementing emerging technologies, the development of new products and services can be significantly advanced. Well-executed digital innovation strategies therefore have a lasting impact on the entire organization, processes, workflow and culture.

3 Considerations When Developing Your Digital Innovation Strategy

When designing your digital innovation strategy, there are a few aspects you should consider. We have picked out the three most important ones and give you some pointers on how they can help you derive better strategies and action plans.

Sources of Innovation

Where does innovation come from? In order to build a sustainable innovation strategy that is also a digital, first, you need to think about all the potential sources accelerating the company’s innovation.
Below are summarized all the valuable internal innovation sources that the company needs to consider when designing a strategy.

Unlike before, when companies relied mainly on their internal sources to innovate, nowadays it is very common for companies to adopt “mixed” innovation strategies by opening up innovation sources to external contributors to create an integrated innovation community. The external sources of innovation are summarized below.

All the internal and external sources of innovation described above foster the analysis and monitoring of the company’s innovation portfolio with regard to strategic goals. As a result, adequate resources must be provided to the most beneficial innovation projects.

Agility of Strategy

A new Mckinsey & Company survey analysis highlights the adaptability of operating models for digital strategy as an important factor that sets top performers from others. They looked at the frequency with which companies pursue operational practices of digital strategy. As a result, it was found that all 10 practices are carried out more frequently by top performers than by the rest of the companies in the survey pool. Out of all the operational practices, top performers assess the unmet needs of customers using various sources the most frequently (see the figure below).

As digital is driving major changes, the companies should be quick and adaptable to set, execute, and adjust their digital strategies.

Digital Technologies

Recent research has shown how the use of the latest digital technologies increases product and service innovation. Thus, firms need dynamic tools to help themselves in managing the new types of digital innovation processes that emerge. Indeed, companies are increasingly relying on technology developed outside their borders, as well as partnering with software solutions providers. Accordingly, companies can use and implement digital technologies to set and implement a digital innovation strategy that is more open and has proper built-in automation.

This is where the dedicated software solutions of ITONICS come in play to cover the entire end to end process of innovation. With the modular software suite, the innovation strategy can be actively shaped and managed from trend, technology, idea and portfolio management all the way to technology and product roadmapping.

If you are a manager, executive or an expert from an innovation unit, we are open to discuss how your company can leverage the potential of technologies in shaping the digital innovation strategies of the future.