Innovation and digital: opportunities and challenges
Updated: May 1, 2022
Former researcher, Business Administration, Industrial Organization, Information Systems, Luxembourg Institute of Science and Technology (LIST)
Currently, professor at EDHEC Business School
*Faculty member of the Business Science Institute
Article initialement publié sur The Conversation France
This article is published as part of the French Management Review's inaugural showcase, "Innovation and digital: what managerial implications?" to be held on September 27, 2017 at the Château de Wiltz (Luxembourg) from 6:30 to 8:00 pm. In partnership with the Luxembourg Institute of Science and Technology, and The Conversation France, this event is organized on the occasion of the graduation of DBA (Doctorate in Business Administration) of the Business Science Institute, whose juries bring together about thirty professors of management sciences for 17 defenses of DBA theses of doctoral students-managers.
Who hasn't heard about the digital transformation and its effects on economic and social life? Beyond the contributions of new digital technologies in terms of communication, this transformation reveals an unprecedented potential in terms of innovation by generating new ways of creating (co-design), financing (crowdfunding), organizing (virtualization), and capturing value (new business models...). However, this potential is still difficult to grasp and control for the majority of companies that are still groping their way through this new digital world.
A recent special report in the Revue française de gestion (N°254) focused on the issues and opportunities associated with these new challenges, and proposes a rereading of the new perspectives related to innovation management.
1. New product development and new innovation processes
The advent of new digital technologies has put information at the heart of new goods and services, which are now "connected". This new technological situation calls for different models to combine physical and digital properties and consequently impacts the classical methods and processes of product innovation. Because of the complexity of anticipating the uses of digital technologies and their malleability, digital innovation processes are more dynamic, non-linear and open.
This necessary acceleration of R&D is itself amplified by the use of new digital tools such as social media (such as Twitter, Facebook...) or ideation crowdsourcing platforms (such as Innocentive...) or user/tester communities for smartphone applications. Sometimes users even use new digital technologies to create new uses or services that go beyond the functionality of the original product.
This phenomenon is further facilitated by the democratization of the use of these technologies based on their ubiquity and their accessibility in terms of cost. Another fundamental factor inherent to product and service innovation is the user experience (or UX). The success story of Apple products shows that new digital products and services must have carefully defined functionalities and aesthetic properties, but also offer a high level of usability in order to maximize the motivation and commitment of users to buy and adopt them.
2. New ecosystem interactions and industry restructuring
The development of goods and services capabilities through digital technologies is leading to a redefinition of competitive rules and industry boundaries, notably through the threat of large data and information-holding firms (such as GAFA) as potential new entrants in existing markets, or through the irruption of new disruptive players (such as Uber).
This new situation leads companies to rethink their value proposition to their customers by integrating digital innovations or risk becoming a minor player condemned to disappear. As a result, companies are increasingly integrating dynamic and complex interactions with their environment into their development strategy, and thinking in terms of business and innovation ecosystems in order to rethink their value creation and capture models. Porter and Heppelmann illustrate this notion with their example of the connected farm, where the creation of an efficient connected system of tractors, tillers and seeders linked to an intelligent system of weather data, seeding and irrigation optimization leads to superior overall performance.
However, if the data is there, accessible at a lower cost and ready to revolutionize existing business models and industrial structures, the issues related to both the different protection regimes (be it intellectual property, personal data or business secrecy) but also to the appropriation of the value created by innovation, are evolving together.
For example, let's consider the current debate on the imbalance between policies and mechanisms for protecting personal data and the exploitation of these same data by firms like Facebook or Amazon. What usage policy should be adopted between local legislation and global business? In high-tech markets, the joint use of intellectual property rights mechanisms (patents, trademarks, copyrights...) is common and their role should evolve to cope with a quantitatively expanding and qualitatively revolutionary exploitation.
3. New organizational designs: towards a redefinition of time and space
The last impacted dimension that we will address here is the organization itself. The new digital technologies are a source of organizational innovation for all the functions of the company in order to make the service offer evolve in real time, thus raising many challenges.
Indeed, if data collection and processing are sources of additional costs, they require organizational capacities to process these data, mobilize the attention of decision-makers, require managerial know-how to identify innovation opportunities and require the development of learning capacities, roles and "digital" skills of employees.
In addition, new digital technologies allow actors to make quick decisions and solve problems as they go along, in a much more flexible way. They greatly increase the volume of exchanges and information flows, both horizontally and vertically, within and across organizational boundaries. They transform these interactions into temporary virtual organizations that transcend the boundaries of a single organization. They thus offer the possibility of creating ephemeral social work spaces, i.e., transient social structures in which decisions, actions, learning and innovation can occur. Studying this phenomenon inevitably raises the question of how to (re)reconcile notions of time and space in organizations.
In short, both evolution and revolution, sometimes mirage and sometimes El Dorado, digital transformation offers many opportunities that will generate new realities, and consequently, irrevocably transform current theories and practices of innovation.
Article translated from French with https://www.deepl.com/translator
Pierre-Jean Barlatier's articles on The Conversation France.
Pierre-Jean Barlatier's articles & books via CAIRN.Info.