Understanding Digital Innovation

In a recent discussion with a founder of Anaxago, a crowdfunding startup, I was asked a seemingly simple question: what’s digital innovation? In what respect is digital innovation different from innovation alone? As we are entering an age of digital transformation where “software is eating everything”, I’d like to initiate a discussion on what this major industrial revolution is all about.

2 ways at looking at digital innovation

I would say that, to start out, there are really two ways at looking at digital innovation:

  • first of all, one can look at digital innovation from the perspective of an established company with an existing value chain
  • second of all, one can look at digital innovation from the perspective of the startup which aims at replacing established companies operating a free digital value chain

Understanding digital innovation from the perspective of established companies

As noted in my discussion with Luka Mucic, Chief Operating Officer of SAP, digital innovation is really a profound process of transforming a company’s existing value chain with digital equivalents. One looks at the entire value chain from resource acquisition to operations, marketing, sales, distribution and servicing. One would list every single production activity along this value chain and see how the same production output can be achieved using digital technology.

digital innovation

I’ll provide an extremely simple example to make my point: 30 years ago, individual contributors working in large companies used to correspond with one another in face-to-face meetings and paper envelopes. Now, they may use digital tools that can replace face-to-face meetings with Skype or telepresence. And they routinely use texting and emails in place of paper-based letters.

In addition, in a discussion I had with Bruno Delahaye, I learned that Dassault Systèmes, is developing an end-to-end solution which aims at optimizing companies existing value chain. I was particularly struck by the solutions features of organizing this online in order to get suppliers to bid and suggests the best resources at the lowest price.

So basically digital innovation from the perspective of an existing company is really meant to optimize the company’s operations by using digital technology.

Understanding the meaning of digital innovation from the perspective of the startup

Startups, as opposed to established companies, don’t have to compose with an existing value chain. They create their own value chain using digital technology from the very beginning. This allows them to focus their attention on creating more value for the customer based on digital technology. The example of Nest comes to my mind. It’s a connected thermostat which replaces the existing thermostat and is based on a different business model. Whereas in the past, a thermostat would cost approximately $250 which was broken into two different costs (the cost of the thermostat itself and the cost of installing the thermostat at home,Nest is a connected thermostat which requires no installation and no special expertise.

digital innovation - thermostatSo the consumer is only paying for the price of the thermostat itself, which helps to lower the cost. In addition, the thermostat collects data on energy consumption and identifies patterns before suggesting ways to reduce the consumption bill, to reduce the energy bill. Also, consumers may program the thermostat to start before they make it home, which provides additional benefits to all of us who prefer walking in a heated room in cold wet weather.

Here, digital innovation not only replaces the existing thermostat but also provides additional features which both help to lower costs and accentuate product differentiation with a new value proposition.

These examples provide a definition of what digital innovation is all about. What’s your take on digital innovation?

 

 

Digital transformation: The Boiling Frog syndrome

I recently delivered several presentations to the chartered accountants community composed in and around town. My impressions after those presentations are reminiscent of the boiling frog syndrome’. This phenomenon mirrors the issues linked to change management in a large number of businesses concerned with digital transformation. Surprisingly, I found chartered accountants to be the epitome of the ongoing changes in the service business, an area much impacted by automation and new generation IT systems and cloud.

digital transformation

Digital impact on chartered accountants: already old hat

The definition of ‘digital’, including automation and the convergence of cloud/IT and mobile, is broadly accepted even though the ubiquitous ‘digital’ moniker is quite recent. When it comes to chartered accountants however, the story goes deeper into history and reminded me of things I had heard and seen as a young man even though the context has changed.
My Father, in the 80s, came up with one of the first (if not the first) accounting automation system, at least this side of the channel. Let it be known that he was an IT director with a background in IT which started in the early. His newly designed HR and accounting system included stock management, payroll management, the whole trappings.

He had also created a very sophisticated book-keeping subsystem (considered a visionary initiative in those days). This system could collect stocks through remote personal computers, powered from a distance by a Mainframe computer. That central computer was connected through the Transpac network. It was a bit like seeing E.T. connect to remote information systems via a phone connection at the time. It was really ground-breaking. Most companies had to wait for years to get something which worked like that.

“You have automated 90% of our work!”

 “You have automated 90% of our work”, the chief accountant commented when my Father released his new system. And what do you think happened after that? Absolutely nothing, of course. The accounting team went on using pen and paper. They were sinking in the comfort of their routine, and patiently waiting for retirement age. Which came in due course. They were right not to fret after all.

35 years later: the scene changes

It’s not surprising at all, I should mention, that it is far more convenient for many to procrastinate and prefer routine to change. It might even pay in the short term, but could prove quite dangerous in the long run however.

35 years later, accountants are finally faced with the need to change. And even to change fast. Their tasks will have to increasingly evolve towards consulting, as recommended by the ACCA (Association of Chartered Certified Accountants).

Well, on paper, this isn’t such a difficult task. Accountants have everything which is required to succeed: finance skills, know-how and the habit of working in the service industry. But if we dig deeper, we find that there will be a strong need for employees to evolve and be able to drive the business. A far more difficult task than that of keying in data manually into systems and validating accounts. A lot of training and support will be required, not everyone can become a skilled consultant. And not everyone will welcome that change.

salaries industry transformation

What will happen to the accounting industry then? It looks like it’s been like a frog which stayed for tooboiling frog syndrome- transformation
long in boiling water and did not see or understand what was happening to him. Other sectors (healthcare, banks, education, travel and tourism…) may be given less time. Let this example encourage them to reconsider their need for a real digital transformation.

 

Note: I have reproduced per below the recommendations issued by ACCA to British accountants a few years ago. I’m not sure they have all stood the test of time. It’s not always easy to predict what will happen and when. Having said that, most of their predictions are highly plausible.  

ACCA’s 10 tips to British accountants facing a professional disruption

  1. In 2015, every accounting firm will offer their clients an application granting them access to their business/accounting information using a Smartphone or tablet;
  1. Accountants will have to stay up-to-date to maintain their role as guardians of corporate data;
  1. The Accounting sector needs new ways to measure and evaluate technological costs and benefits of cloud computing;
  1. Accounting will shrink as a profession, while software vendors progressively integrate financial expertise with products that are increasingly considered self-learners;
  1. The CFO of tomorrow will have to have as much technological knowledge as financial knowledge;
  1. If accountants do not seize technology, they will go extinct just like dinosaurs: both as individuals and as a profession;
  1. By 2020, audits could be conducted in real time. Auditors will extract data directly from the information systems, that are linked to real time stocks using sensors (stocks, livestock, employee count);
  1. If accountants do not position themselves as emerging trend experts (i.e. crowdfunding, new payment platforms, …) other professions will do instead;
  1. Accountants must use emerging technologies to attract talents and develop existing talent;
  1. By 2025, all digital data will be available to everyone.

Smart cities: from fantasy to reality

There are a lot of disruptions in today’s world. On one hand, we can observe a huge increase in population and in resource consumption and waste. On the other, nobody can fail to notice all the technological advances. This evolution in technology is revolutionising everything we do, and even the way we live. A few years ago, the idea of a Smart City was a fantasy. But today, it is becoming a reality. Let’s discover the different aspects of this ‘futuristic’ city.

What is a smart city?

We have all heard about smartphones, smart appliances and many other smart devices. But what are smart cities exactly? Just like any smart device, these cities function on information and communication technologies. Indeed, they use power sensors, wireless networks, and web/mobile-based applications. Their purpose is to be as sustainable as possible, both economically and environmentally. In other words, a smart city uses advanced technology to offer its citizens energy-saving buildings and transport, in addition to a better waste and resource management. While managing natural resources in the best way possible, it provides them with higher standards of living.

smart city
High standards of life with low use of resources are now possible

Why do we need smart cities?

Logically, the development of an innovative concept is based on the creation of a need. There are various elements that contribute to the creation of smart cities. Among these, we find population, transport, water and global energy. There are an infinite number of studies showing that the world’s population is increasing, aging, and moving to urban areas. By 2025, it is predicted that there will Read more

How far can your Twitter bird chirp?

They say “word travels fast”, but today, it can travel the world in a few clicks. Have you ever wondered where your 140 characters on Twitter fly to? I recently re-activated my twitter account. I’ve been sharing and retweeting quite a lot of content with people from all around the world. Indeed, people from different origins follow my account now. Thus, making me curious to know where my followers come from. When I asked myself this question the other day, I decided to try different tools available online. These tools are as practical as scary. I decided to try and compare some of them. Let’s discover what different features they offer.

Mapmysocial:

Mapmysocial is a tool that allows a social media user to map their Facebook, Twitter, LinkedIn and Foursquare followers. It gathers followers’ profile pictures and positions them on the world map. This map can be then shared on social media in 2D or 3D. The use of this application is totally free. There is no obligation to follow mapmysocial on any platform, or publish a promotional post. All you have to do is sign in on the platform, through the mapmysocial website. This authorizes the website to access some of your account’s information.

Twitter map my social
www.mapmysocial.com

Tweepsmap:

Personally, I found this second tool to be great. It allows Twitter users to map their followers – even to a city level-, to observe their followers’ trending topics, and explore keywords (hashtags). This is useful to analyze further the engagement and effectiveness of a digital activity on Twitter. It also helps Twitter users to Read more

B2B and social media: a love story

When it comes to social media, working in B2B with field experts might seem like a bit of a challenge. On the contrary, our view is that social media is particularly useful in B2B. Let’s find out why.

B2B marketing is about implicitly proving you are the best

Before going a step further, it is important to understand fully what B2B marketing is. Let’s sum it up in a few words: it’s not about saying one is the best, but more about proving it with the right skills. Basically, B2B Marketing brings together experts of a particular field, who express and share their opinions with others, and generate interest.  And following that, comes what is known as “lead generation”– or in other words: the beginning of the purchasing process per se.

Pinpointing 6 key success factors in B2B social media

1. B2B sales are based on ‘solution selling’ (as explained by Michael Bosworth). In B2B marketing, what matters the most is informing clients about problems before solving them. This consultative approach could not be mastered without the people who are au fait with the content they share (e.g. technology-related subjects). Experts who know all the details about a particular field are the only ones who are able to express their views correctly,

2. Who interacts with these experts? Mostly other experts who surf on social media (blogs in particular), seeking information and answers to their questions.B2B social media influence Buyers obtain credible answers to their questions after marketers dig in and share information about the problems they are experiencing,

3. B2B often attracts niche but faithful communities. They are usually very close to one another, and very passionate about their area of expertise. Social media is an important player (especially blogs) in that field. Comments and views can be posted online and are the basis for passionate exchanges between experts,

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