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Why successful innovation needs data and purpose
FEW business leaders today will deny that innovation is a business imperative. Many are investing in internal innovation hothouses or funding startups, which has been useful in tapping into and catalysing new ideas. "Failing fast" has become increasingly acceptable - and even encouraged - in order to allow the spirit of experimentation to flourish.
Yet, the challenge for most innovation-seeking companies isn't to fail fast - but to scale fast. Frankly, many succeed in idea-generation while far fewer succeed in scaling those ideas into something that makes a real impact on the business.
The paradox is that business leaders often need separate teams to give people the freedom and resources to innovate, yet they also need to integrate these efforts into the main business for deployment so as to commercialise the good ideas.
Even with the most detailed business plan or strong financial backing, some innovation projects remain as innovation projects. In going back to the drawing board, many may choose to abandon their original concept and chase after new ideas.
This does not have to be the case if businesses recognise that behind each endeavour, including those that fail, lies a treasure trove of data about the customer, the market and the business model.
No idea is ever perfect from the onset - but it can be perfected through intentional experimentation and rigorous evaluation backed by data and analytics.
DIFFERENTIATING WITH DATA
Today's business leaders are at an advantage as technological advancements have made it possible for data-driven insights to be accessed in real time, which can then be used to continuously improve and evolve their innovative ideas from start-up to scale-up.
For example, consider how organisations can tap on the borderless nature of data to assess different geographical markets' receptivity to their offerings as they pursue market expansion opportunities.
Further, with real-time data integrated into the lives of the future consumer, customers will increasingly expect businesses to meet their needs in micro-moments and in bespoke manners. The responsiveness and agility demanded of future supply chains and operating models will catalyse a disruption throughout the entire value chain from design to production to delivery.
Data-backed intelligence that informs decisions on creating and delivering customer experiences that delight every time and all the time will become even more vital. Businesses will do well to build in technological capabilities to integrate the explosion of customer data as production inputs.
At the same time, they will need to automate intelligently to realise new levels of operational efficiencies or run the risk of disintermediation. Transforming operating models is a complex initiative that will need to be guided by data instead of the vision and intuition of the business leader alone.
INNOVATING WITH PURPOSE
While data and analytics can help inform decisions and improve the success of outcomes, technology in itself cannot lead an organisation. The responsibility of making the right choices, growing an organisation's potential and soliciting support from stakeholders falls squarely on the shoulders of the business leader. This includes choosing the right innovation project to invest in - or kill.
A truly innovative company is not reflected in its snazzy labs and technology gurus but rather in how it thrives on optimising the current state through creative problem-solving while simultaneously harnessing new technologies and business models to generate new revenue streams.
Yet, it is impossible to innovate and transform every aspect of the business, that is, systems, operating models, processes and culture, all at the same time.
Therefore, companies need to prioritise change - going beyond profitability considerations and centering on its organisational purpose, which provides a powerful and meaningful context to rally buy-in.
Purpose gives the company a way forward to break out of the shackles of short-term thinking, and creates a clearer long-term path for why certain innovation can and should be pursued. In a study that EY conducted jointly with the Harvard Business Review, it was found that of the executives surveyed, 84 per cent said a strong sense of purpose positively affected their ability to embrace transformation.
Further, a report by the Economist Intelligence Unit and supported by EY revealed a distinct connection between purpose and innovation. A 63.4 per cent majority of executives from across three global industries believed that having a sense of purpose and aspiration beyond their day-to-day commercial mission made their company more innovative and therefore more able to disrupt or respond to disruption.
However, despite acknowledging the benefits of a strong sense of purpose, many business leaders have yet to unlock its true value, simply because the purpose is not well-integrated into the organisation's ecosystem. Organisations need to consistently align their decision-making on innovation projects to their purpose. In doing so, purpose can help business leaders to focus discussions away from the emotional sensitivities involved in difficult decisions such as killing off ideas that are ingenious but unsustainable.
The current disruptive environment has made innovation more important than ever before. In our work with leading companies around the world, the most successful businesses are led by purpose and data in decision-making - and not technology. They focus on customer outcomes and improving the customer experience, continuously experiment and test, and show high levels of automation and agility.
In other words, they are not just actors in the theatre of innovation; they are builders of a better working world for others and themselves.
- The writer is EY Asean and Singapore managing partner, Ernst & Young LLP.
The views in this article are those of the author and do not necessarily reflect the views of the global EY organisation or its member firms