Pragmatic Innovation: The Role of Targeted Initiatives in Digital Business
Digital business and digital transformation are often synonymous with keeping on the cutting edge and pushing the boundaries of innovation. Being a leader in your industry and bringing products, better service or the latest delivery model to market can help you stand out. Yet for many midsize businesses, the realities of pursuing innovation are very different. Large initiatives take too many resources, without the immediate payoff leaders hope for. Sweeping changes and blue-sky thinking have a place in business, but midsize companies are safeguarding their resources closely and focusing on immediate results.
Instead, mid-size digital business efforts are increasingly focusing on making incremental improvements that support better efficiency, higher productivity and a better customer experience. A pragmatic approach to innovation is increasing the chances for success and enabling more midsize businesses to invest in digital business initiatives. Here’s a closer look at the concept of pragmatic innovation and how it can help your organization reach its goals.
The Case for Pragmatic Innovation
When you think of innovation, chances are you think of major disruptions. It’s the force that causes services like Netflix to disrupt Blockbuster, or the way that online shopping with brands like Amazon has upended retail. However, innovation happens in business every day through a series of improvements at different touch points in the organization.
On a day-to-day level, many organizations are focused on innovation that hits customers and business opportunities in a more practical way. In one IDG survey, 37% of IT leaders noted that innovation meant identifying parts of the business that could be improved with digital technology. Slow processes, poor customer experience or the opportunity to optimize back-end performance has taken a front seat. The priority is all about upgrading core systems and making strategic investments to move the business forward. Major gains can be had through improvements to the CX, improving security or speeding up baseline processing across the network, for example.
As one author notes in CIO, “Where before the effort was to innovate to the max, today’s initiatives are more likely to be more modest and lean toward innovating with intent. In short, a lot of the smart budget money will be spent on projects that are framed with a more thoughtful and even surgical approach to innovation.” Midsize companies are asking hard questions about digital business initiatives, including:
- What are the costs, both in terms of budget and effort?
- What kind of an impact will this investment have on the bottom line?
- How long will it take to see an ROI?
- What’s the time from concept to completion?
- What other kinds of impact will the digital business investment have, from eliminating delays to delighting customers?
- What are our metrics for success?
- How does this initiative align with our short-term and longer-term goals?
Midsize Digital Business Spending is on the Rise
A more laser-focused approach to innovation and digital business doesn’t mean that spending is down. Spending on digital business initiatives is actually up for midsize companies. According to Spiceworks, more than a third of midsize businesses saw an IT budget increase due to the recent tax cuts. Midsize companies were expected to spend $229 billion on IT initiatives in 2018, reports IDC. An increase in spending has several implications. On one hand, it points to more resources that are available to accomplish projects. Yet there’s a more targeted force running through the business determining how those resources are deployed.
According to the latest studies, midsize business leaders are excited about the possibilities and the options. Digitalist reports that over 70% of midsize businesses report that they meet or even exceed their expectations with technology investments. As long as businesses continue to see results and be strategic about how they move forward, digital business initiatives will generate strong results and continue to gain support at all levels of mid-size organizations.
Less Talk, More Action
One way that midsize businesses are assessing potential initiatives is through the lens of action versus strategy. Let me give you an example. Recently, a digital business team I worked with had funds available to invest in their customer experience (CX) infrastructure. One team came forward with an extensive plan to spend a large percentage of the budget for a brand name consulting company to map their CX, and then proposed a fairly substantial investment in a customer experience platform.
An IT director proposed a more targeted set of initiatives. The company had experienced two breaches in the last year, and he proposed improving cybersecurity and centering a marketing campaign around stronger security. He also suggested improved network upgrades, a redesign of a critical customer touch point, and rethinking the way that customer service complaints were handled. Each of these initiatives was tied to a core customer pain point, showed the potential for immediate action and didn’t result in thousands of dollars for high-concept thinking that never turned into bottom-line results. There’s less appetite for abstract initiatives and more demand for investments that generate real results.
Innovating for Productivity Gains
Consider the case for digital business investments and innovation targeting productivity gains. The more productive your employees are, the more you gain dollar for dollar on their compensation. Technology and digital business initiatives can help drive back-end productivity by eliminating inefficiencies, automating core processes and providing employees with the support they need to get more done. Consider this: if you have multiple locations, how much time are your teams spending trying to share documents, look through emails or schedule meetings? Investing in collaboration tools, file sharing systems and project management systems can result in significant efficiency gains that add up exponentially.
Investing in Foundational Technology
From a technological perspective, midsize brands are moving away from sweeping investments in untested technology and, instead, retrenching to update their core infrastructure. According to the Spiceworks 2019 State of IT survey, the need to update outdated infrastructure is the #1 driver of business investments this year. Midsize companies are investing in servers and hardware, upgrading their software assets and looking at strategic investments in networking and other tools that can drive the business forward. Foundational technology underpins the success of larger business moves and can pay off in a multitude of business areas.
Businesses are being more strategic with how they invest—in technology and digital business. Innovation doesn’t necessarily mean sweeping change or the forces that disrupt an industry. Instead, companies are focusing on smaller, achievable goals that can be completed within a reasonable time and budget—and make a trackable input on the business.