7 Warning Signs that You're Not Ready for Digital Innovation

Are you toying with the idea of digital innovation? Maybe a few of your company leaders went to a conference and came back stoked about the possibilities of AI. Or maybe you know that a competitor has gotten good results with a new tool. Now you’re wondering if digital innovation is worth it, and you’re thinking of dipping your toes in the water.

Don’t do it!

At least not yet.

Here’s why: Immediate digital innovation isn’t for everyone.

Are you shocked?

It’s easy to read the blogs and sales pitches and come to the conclusion that digital innovation is the right move for every company. It’s not. If you’re not ready for digital innovation, launching a project can be worse than not doing anything at all, because it can doom you to wasted effort, cost overruns, and customer disappointment.

So before you take the plunge, here are seven clear signs that you’re not ready for digital innovation:

1. You don’t have a strategy in place

Innovation is risky, and it’s even more risky if you don’t have an end goal in mind. Innovation for its own sake is rarely successful, because it lacks both a plan and a team that is responsible for executing that plan. But with the right strategy in place, all the benefits you’ve read about will be well within your reach. Here are a few of the questions your strategy should answer:
* How will this help us reach our business goals?
* How will this help our customers?
* How will this help our employees?
* How will this save money?
* How will this make us more productive?
* How will this strengthen our business capabilities?
* How will this provide competitive advantages?
* Where do we want to be technologically in five or ten years?

You don’t have to know every answer to every question right away. You should, however, have specific, measurable goals woven into your strategy as well as a process for regularly reviewing your progress toward those goals.

2. The ROI doesn’t outweigh the risk

It’s true that digital innovation can deliver a lot of benefits, including higher profit, increased productivity, and reduced costs. But you will only achieve those benefits if the tools you implement help you achieve your company’s goals and meet customer needs.

But in some cases, the risks of innovating are greater than the potential return on your investment. Those risks may include the financial costs of innovation, the drop in productivity as you implement and learn a new system, your employees’ readiness (or lack of it) for change, your timeline, and your ability to execute the project with the available resources.

Before launching any new innovation, analyze both the risks and the potential for return. If you can’t clearly demonstrate the ROI for the project, tap the brakes.

3. You’re copying someone else

How many times has someone suggested changing a tool or process because a competitor or some other large company has done it that way? If Google does it, so should you, right? I can’t tell you how many people have explained their new idea as “Uber for _______.”

The truth is that what works for Google or Uber (or your local competitor) may not work for you. Your customer base is different, your company culture is different, your employees have different skills and objectives, and you have different resources available to you. Don’t start an innovation project until you have a customized strategy in place (yes, it’s about strategy again) that details the unique needs and goals of your company. Only then can you decide which technology will propel you toward your goals, not those of someone else.

4. Your data isn’t reliable

Digital innovation accomplishes nothing without data. You can’t benefit from the power of AI, machine learning, IoT, or any other digital technology until your data is clean and accessible. If you have data from various sources stored in separate places, you’ll need to fix that before you move forward with an innovation project.

If you are using an outdated system, it’s common to find data stored in different databases or even on an employee’s hard drive. You may also discover data discrepancies or silos if your company has gone through a merger, acquisition, or systems upgrade. Before launching a digital innovation project, you’ll want to lay the groundwork with an integrated data solution that supports the unified collection, storage, and access of your data. Or else you’ll want data innovation to be the first part of your projet.

5. You don’t have enough stakeholder support

Every project requires collaboration from stakeholders to be successful. You need executives who will sponsor the project, a project manager to keep everyone on track, and a team of engineers, data scientists, and IT technicians to implement the change management required with any innovation. Some of that support can come from outside the organization if you’re working with a third-party development firm, but you’ll still need sufficient stakeholders within your company to lobby for resources. You will also need buy-in from end users before you launch.

The problem many companies run into is that everyone wants the benefits of digital innovation without the resource investment. You may run into trouble securing the budget you need, or leadership may choose the “safest” option that won’t really make a measurable difference in your outcomes. A detailed cost/benefit analysis can help, but once again the real solution falls back on your strategy. What business goals will the project accomplish and what is your projected ROI? How will this project make employees more productive or efficient? How will it generate more profit?

6. You’re not OK with learning from your mistakes

Some of the most successful ideas in the world are built on a foundation of mistakes. In a 2016 letter to shareholders, Amazon CEO Jeff Bezos called his company “the best place in the world to fail.” That’s because he views negative outcomes as steppingstones in the learning process.

The goal, of course, is to correct mistakes before they derail the project completely. A so-called “culture of failure” doesn’t mean that you reward bad judgment or wasted time and resources. Instead, it means you encourage employees to take educated risks. Even when those risks don’t pay off, you’ll be able to make course corrections early in the process to keep the project on track.

Why is that so important for digital innovation? Because new technology implementation always encounters bumps in the road.  It goes with the territory, and the way you respond to them will determine whether or not your project ultimately succeeds. So start with a minimum viable product, test your assumptions, and be ready to pivot your plans when you gain new information that innovation inevitably provides.

7. You don’t know what your employees really need

Too many projects are designed based on an idea from a senior executive without ever talking to employees at the ground level or real-life customers. That’s almost always a mistake. You need input from the people talking to customers, taking orders, entering data, closing sales, creating reports, and operating machinery. If you don’t understand the problems they encounter on a daily basis, you won’t be able to design a solution that they will use.

A study from Forrester Research found that almost 40% of the problems encountered during a technology project resulted from slow user adoption or change management issues. That’s a sign that one of two things is happening:

1) The solution doesn’t meet the needs of the employees (i.e., there are things they can’t do with it) OR

2) There has been insufficient communication or training around the solution (i.e., they don’t know how to use it or don’t want to).

Before you start a digital innovation project, take time to listen to your end users whether it be through design thinking or some other information-gathering process. Then, develop a change management strategy that will give them the information and knowledge they need to use the new technology.

Conclusion

You can’t know when it’s time to innovate unless you understand the steps that have to come first. Roadblocks like those above shouldn’t throw you off track for long, but if you move forward without addressing them they will almost certainly guarantee the failure of the project.

Digital innovation is changing the world, but that change has to start inside your company and your culture first.

Are you ready?

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