What is Digital Innovation & Why is it Important?

What is digital innovation?

Digital innovation is the strategic practice of using modern digital technology to solve business problems. These initiatives can help:

• Optimize business processes
• Improve customer experiences
• Deliver new business models
• Create a competitive advantage

More specifically, business adoption of new technologies can include:

• An augmented app that shop floor workers use to check temperatures and prevent machines from overheating
• A healthcare company implementing AI to help better diagnose patients’ ailments
• Digitalizing and integrating data from disparate sources for complete, timely reporting

An example of digital innovation

Wearable devices, chatbots IoT, artificial intelligence (AI), big data, and other examples of digital innovation are everywhere.

For the pizza chain Domino’s, innovation came from improving its ordering application. About 70% of customers placed orders through the app, but face-to-face pickup was still necessary.

When COVID-19 made it difficult for customers to pick up their orders, Domino’s built new app features so customers could place orders and receive contactless delivery. This innovation paid off. Mobile app orders increased to 80% — the highest the company had ever seen.

Domino’s example involves the application of digital technology to improve efficiency and increase customer engagement. Their success combines the right fit between digital business innovation and the company’s overarching digital strategy.

Why is digital innovation important?

There is a digital component in almost every part of human activity, whether for work or personal consumption. We see digital innovation around us daily when we call a Lyft or book a travel stay using Airbnb.

Businesses risk becoming irrelevant if they don’t innovate or adapt to evolving consumer and business habits. And the competition will be fierce, as Foundry reports that 93% of organizations plan to adopt a digital-first business strategy.

In an age when building applications no longer requires months or years of writing code, it’s a simple case of disrupt or be disrupted.

Who is digital innovation for?

Digital innovation is for every business looking to remain competitive and profitable.

At the functional level, creating business applications is no longer the sole domain of IT. With innovative platforms like low-code, business users in HR, marketing, operations, finance, and any other department can build modern applications.

Digital transformation vs. digital innovation

Digital transformation is an ongoing process to transform and improve business performance by changing how a company thinks and operates. Unlike common perception, digital transformation isn’t only about the technology you adopt. It also involves people, processes, and your portfolio.

Digital innovation (or digital business innovation) is that spark of creativity that leads to developing new technology or innovative applications. It’s often the precursor to digital transformation.

Domino’s built an omnichannel strategy that lets pizza lovers use chatbot technology and AI to place orders. Now, all customers had to do was send a pizza emoji 🍕 through Facebook Messenger, and Domino’s would receive their order. Pretty neat, right?

Except, there was more to it than that. Domino’s had to digitally transform its internal processes to make the most of this technology. It had to integrate all of its databases — and therefore customer information — to save time and automate the process. While the customer may see only a pizza emoji (and then the real thing), so much more is happening behind the scenes.

3 focus areas for your digital innovation strategy

Changes to processes and technology drove innovation at Domino’s. People and processes are a key — but often overlooked — part of digital innovation strategy.

Now that you know what digital innovation is, how do you implement it? A successful digital innovation strategy requires focusing on three different areas:

• Customer, partner, or supplier engagement
• Product and service innovation
• Internal systems processing, reporting, or access

1. Customer, partner, or supplier engagement

Convenience is the name of the game here. How can you make it easier for your customers or suppliers to engage with your product?

For many companies, applications can help them achieve this goal. Apps that support this goal include advisement tools, fact-finding assistance for employees, and customer portals may help. Take the insurance industry for example. Customers are looking for more digital solutions when interacting with insurance companies.

IBM found that 38% of customers want virtual assistants to help them with self-service tasks. However, only 16% of insurance companies use and support virtual assistants. And a staggering 75% of customers want to see new technologies incorporated into the companies they work with.

It may not be enough for insurance companies to offer stellar customer service over the phone or through chat. Companies may need to look for new ways to engage with their customers. That’s what Zurich Insurance did. While it already had a multi-channel approach, it developed a digital innovation strategy that focused on customer centricity.

2. Product and service innovation

Digitally differentiating your business — whether by enhancing existing products and services with digital components or even creating net new products or services — is another key way to implement a digital innovation strategy.

Product and service innovation often involves:

• New applications that enable mobile services
• Personalized product offerings
• New business models

As part of its focus on customer centricity, Zurich created FaceQuote. This app uses facial recognition technology to help customers quickly get an estimate for a life insurance policy. FaceQuote updated an existing (and time-consuming) process through digital innovation. All customers had to do was take a selfie using the company’s app.

Using low-code, Zurich was able to develop the app in just one week. The app can estimate a customer’s age based on their selfie and offer a quote. Once customers received their estimate, Zurich gave them a link to the full-service life application tool.

3. Internal systems processing, reporting, or access

An app is only as good as the processes supporting it.

Digitizing your back-office processes improves efficiency and reduces service and support costs. Better back-office processes also improve response times and customer satisfaction.

New applications with better data access and greater mobility help:

• Automate complex internal workflows
• Enable faster reporting decision-making
• Empower your workforce

Zurich used low-code and an agile workflow with its team to move quickly. The results speak for themselves: Zurich Insurance processed 63,000 life insurance quotes in one year.

End-to-end solutions are key to digital innovation

At the functional level, creating business applications is no longer just the domain of IT. With innovative platforms like low-code, business users in HR, marketing, operations, finance, and other departments can now start making applications.

The three focus areas for digital innovation have one thing in common: They incorporate end-to-end solutions.

An off-the-shelf solution — like a third-party app — can bring unexpected complications and extra time investment. But an end-to-end solution allows a company to own the entire process.

End-to-end offers several other benefits:

• A reduction of redundancy and costs
• Easy integration
• Increased automation and productivity
• Improved data security

Implementing a digital innovation strategy can be hard if you’re working with a patchwork of software that doesn’t integrate. This patchwork may have worked for a smaller operation or project, but it may unravel as a project grows.

How to kick off your digital innovation initiatives

More and more organizations are creating innovation labs, or fast-track teams, that act as incubators within their enterprises.

These groups provide a fast lane through the business to accelerate the delivery of applications that tie into digital innovation initiatives. But accelerating end-to-end results requires the right people, process, portfolio, and platform. Here are a few tips to get you started.

People
Select two to three people passionate about delivering business value. Create a small group of highly focused people who can collaborate to find digital solutions to complex business challenges.

Process
Leverage an agile, iterative process to drive innovation without disrupting existing operations or development efforts.

By continuously iterating, you can release new digital functionality more frequently, show progress, and collect more market feedback. Incorporating better quality feedback will improve the products and features from future development sprints.

Portfolio
Creating a project portfolio of quick wins and high-value initiatives allows you to realize immediate success. It also creates a wow factor.

Successful high-value initiatives justify broader organizational change — especially when the applications power relevant strategic initiatives.

Platform
Find the right technology to empower your people and reinforce your process. Look for a unified platform that manages the entire application lifecycle.

This includes:

• Program management
• Team collaboration
• Rapid application development
• Instant cloud deployment
• Application management

How low-code empowers digital innovation

But low-code development is revolutionizing the way businesses build mobile and web applications. A low-code platform like Mendix acts as a catalyst that transforms emerging technology like AR/VR, IoT, AI, and machine learning into business solutions for real-world problems.

Learn more about what you can build with low-code, or contact us to learn more.