Innovation was a buzzword for business owners even before the coronavirus pandemic. For years now, industries across the board have been moving towards becoming more digitally mature. Improved technologies have proven to increase workplace efficiency, foster innovation, benefit consumers and so much more. The pandemic has shown many businesses just how important innovation is. Whole industries were forced to rapidly develop new business processes, ideas, and sometimes shift their entire operating models on a dime. Companies had to figure out how all employees could work from home. And businesses had to figure out how to stay relevant and stay alive. If these last few months have taught business owners anything, it is that innovation is key. And the key to business innovation to make it to 2021 is digital maturity.
In this article, we will discuss what business innovation looks like. We’ll go over the trends and patterns of how companies achieve digital maturity and digital transformation.
We will also delve into the nuts and bolts of innovation. Just how do you incorporate new and improved technologies into your existing business structure to ensure future financial health?
So What is Digital Maturity?
Let’s take a closer look at the term “digital maturity”. It often serves as a guideline or benchmark for innovation in businesses. Companies are thus digitally mature when they enact policies, processes, and strategies that result in a wide range of benefits. And these in turn translate into improved financial outcomes.
For our purposes today, the key thing to remember about digital maturity is that it provides a huge boost to companies’ ability to innovate.
One of the most important drivers for business innovation is instability. When factors are outside of a business’s control, circumstances are unclear, or outcomes are uncertain, therein lies the need to innovate. And not only to innovate, but innovate quickly.
The events of this year have proven this to be true. But they are not the first time that innovation has emerged as a way to correct for or overcome unstable circumstances. The state of the economy, world affairs, or changing consumer attitudes can all be reasons to make changes. As a result companies give themselves a competitive advantage vis a vis innovation.
Companies wanting to be able to survive and thrive under uncertain circumstances will thus be proactive. In this way, they will draft several business models to address their plans to adapt and innovate when undergoing various changes to the status quo. When equipped with a business strategy, business model and process innovation is much more attainable.
What Types of Business Innovation Have We Seen?
And what types of innovation have we been seeing during this pandemic? Digital maturity has been a huge prerequisite for many companies that have been able to successfully innovate this year.
Digital maturity gave many companies the tools they needed to be able to make rapid changes to their existing products or services. Or even in some cases they were able to come up with brand new or improved products.
This could mean anything from:
- having invested in supply chain enough to be able to know exactly how to use it to corner their market share
- having a strong enough online presence to convert all their in-person business to digital business
- knowing how to effectively shift all marketing to digital platforms
One fact that holds true for those that experience rapid product innovation is that they know how to use what they already have. This means when faced with a time crunch, they can repurpose the resources and knowledge that they already have. And in doing so, they find a solution.
We have seen this work effectively so many times in 2020. Think of all the breweries and distilleries who used their existing resources to produce hand sanitizer instead of alcohol for consumption. Or the clothing manufacturers who started making face masks early on. Or the hotels that adapted their rooms for new purposes, the list goes on and on.
All of these success stories involve quick thinkers with creative ideas who were willing to take a risk. The willingness to take risks that we see so often in innovative companies not infrequently stems from the venture capital field. Time and time again, venture capitalists have shown that they like to fund businesses that aren’t afraid to achieve major successes through risk taking.
So What Does Business Innovation Look Like?
So far, we have discussed some of the motivations, impetuses, ideas, and theories behind business innovation. Now let’s delve into what having an innovative business looks like realistically.
- What does a company’s budget look like when it has to account for digital transformation and innovation?
- How much does it need to change?
- How much of the budget does technology take up?
Industries in general are at a sort of crossroads when it comes to answering these questions. According to Deloitte Insights, 72% of CIOs across industries say that the most appealing projects to executive leadership focus on innovation and emerging technology.
However, information technology only accounts for an average of 3.64% of company budgets across all industries (also according to Deloitte Insights). Even more, Deloitte Insights tells us that the average IT department invests only 19% of its budget on innovation.
All of these figures point to an apparent paradox. We see a discrepancy between the stated innovative desires and plans of businesses, and how much they are actually investing in innovation and new technology.
Business innovation is a true ROI
Some organizations are getting it right though. A such, they have figured out how to actually budget for the innovation that they have written into their strategic plans. Before getting into the actual budgetary differences, though, it is important to point out that these businesses have something critical in common. And that is they are all digitally mature and at the forefront of digital transformations.
What is one of the most important budgetary differences in these digitally mature companies? Well they, unsurprisingly, spend much more money on innovation than less digitally mature organizations do.
Digitally mature companies also tend to spend twice as much as non-digitally mature companies do on technology (according to Deloitte Insights). They are also more likely to increase their technology budget annually. It is not hard to imagine how prioritizing technology like this helps a business. In doing so, it has a much better chance to conduct the research and development that will lead to product innovation.
Measuring the results of your business innovation
The final facet we will discuss that sets digitally mature companies apart is their heightened ability to measure the impact of their technology investments.
This means that they have figured out not only how to invest in and prioritize technological advancements and innovation. But they also know how to capture, measure, and analyze the effects of their investments. This sets them up for prolonged success in terms of digital transformation and innovation. In doing so, they can discern which innovation efforts are worth continued investment. And thus they can then calculate how much continued investment they are worth.
Oftentimes fully investing in the technology that will help your company innovate involves a slight mindset shift. To fully take advantage of the innovation opportunities out there, companies need to embrace a growth mindset.
Instead of viewing a growing technology budget as a prohibitive cost, it should be viewed as an exciting investment. Businesses need to take the time to ensure they have a CIO and an IT staff that are fully devoted to the research, development, and occasional risk-taking that goes into successful product innovation. As a result, they will have set themselves up well for achieving financial improvements.
Of course, this mindset also involves leadership that is just as invested in innovation as the technology experts on staff. With a motivated, excited, visionary team, any business should be able to start taking steps toward innovation.
Take a Step Towards Business Innovation and Financial Health in 2021
And we at Saddock Advisory are here to help you along the way. Even if you have all of the pieces together, it can sometimes be hard to know where to start – and that’s what we’re here for. We have worked on many company budgets, and we know how to budget technology in – whether you’re a small business or a corporation. We will work with you to develop an individualized budgetary plan that takes into account your core business strategies, your comfort with risk, your industry, your financial situation, and all the other factors that go into developing a budget. In short, we can provide guidance on tech spending for the future financial health of your business.
We Can Help
We know it’s hard work to own a business, and we’re here to help. Our team of business financial advisory experts are ready to work with you to figure out the best plan for you.
At Saddock Advisory, we can help determine if your business is financially healthy. Get in touch with us here to find out more.