Digitising Innovation Management: Leveraging Social Technologies and AI to address hierarchy, bureaucracy and cognitive bias
New on digital disruption, digital economy, platform economy and digital transformation is ubiquitous in the media today, much more than ever before. There is plenty of hype and debate on how Blockchain technologies, algorithms, Artificial Intelligence (AI) and the Internet of Things (IoT) would transform industries and create new growth opportunities. In Southeast Asia, the digital wave is dominated by technology start-ups such as Lazada, Traveloka, Tokopedia, Grab and Go-jek, where the latter two have morphed from ride-hailing companies to ‘super apps’ that offer everything from food, transport, delivery, payment and insurance services in a single experience. Other than providing income opportunities and delivering value to millions of customers, they were able to come this far by fully embracing the digital and platform economy, coupled with their customers’ readiness and ecosystem infrastructure and support. They derive their competitive edge from customer data, algorithms, network of partners, brand and innovation. The fact that business media brand, Fast Company, crowned Grab as the second most innovative company in the world in 2019 is a testament to this. Founded in 2012, Grab has established their presence in 500 cities across 8 countries in Southeast Asia, including Malaysia, Singapore, Indonesia, Thailand, Vietnam, Cambodia, Philippines and Myanmar. While much of the spotlight appears to be on the arena of start-ups and purely digital companies, many large corporates and traditional industries are also harnessing the benefits of digital operating models.
There are many approaches and techniques to innovation, such as design thinking, lean start-up, business model canvas and stage gate. Regardless of the approach, every innovation effort should focus on the following four key outcomes:
Generating these outcomes in large organisations is different from doing it in start-ups. Other than the involvement range of functions and stakeholders with a company’s strategic direction and risk appetite, a recent survey highlighted the key obstacles for innovation are the lack of trust and empowerment, and lack of clear direction from management. These barriers stem from the human factors, relating to bureaucracy, silos and cognitive biases. Bureaucracy refers to the complex and multi-layered systems and processes within an organisation. Although these are in place to maintain uniformity and control within an organisation, it fuels power distance, leading to an authority gap and decision making delays. Business unit silos present themselves in conflicting agendas, limited leadership, lack of collaboration and an enhanced overconfidence gap. On top of that, cognitive biases are inevitable, where as individuals, we are unable to process all information objectively and resort to mental shortcuts when making decisions.
The convergence between digital transformation and innovation management thus presents an opportunity to revolutionise what is still largely managed in a traditional manner: through emails, instant messages, spreadsheets, presentations, post-its, and an endless schedule of meetings. Digitising the innovation endeavour through the use of platforms provides for safe storage in the cloud, increased efficiency, reduced operational costs, and eases data analysis. Additionally, a digital platform provides scalability, structure, and repeatability for the innovation process. This allows organisations to carefully plan, manage and monitor their innovation efforts in real time whilst tracking the process and aligning it with intended goals and objectives. More importantly, digital platforms can help overcome the many barriers to innovation stated earlier, whilst encouraging collaboration. An example of a successful internal collaboration can be found at the Kuala Lumpur office of Nestle, the multinational food and beverage company. In 2016, the company held its inaugural Innovation Awards, aimed at promoting idea generation amongst its employees. The results were momentous- 6,000 participating employees generated 50,000 fresh ideas, which in turn translated into a 10% increase in sales revenue in that same year. Digitising collaboration has made innovation continuous, relentless and fast.
As we move towards a digital business paradigm, machine and human decision-making increasingly coalesce. Blending technology-enabled insights with a thorough understanding of human judgement, reasoning, and choice will allow organisations to create and sustain a competitive edge in this increasingly complex world. The crucial step is not the technology itself, but the current digital behaviour of employees and management that need to embrace the digital and platform economy.
In conclusion, the digitisation of innovation management allows organisations to spend less time managing innovation and more time on things that really matter- like uncovering insights and opportunities, working on prototypes and pilots and most importantly, creating value for customers and the company.
More recently, our Innovation Strategist, Azim Pawanchik, spoke on this at ISPIM Bangkok March 2020. To learn more about what we do, visit alphacatalyst.com.