- Product innovation can help meet customer needs and attain business goals, but often, it does not live up to the hype.
- Digital products need to be developed with maturity and scalability in order to deliver true value.
- With good data, the right leadership, ways of working and a holistic approach, digital products can solve organisational challenges and lead the way to next-level value.
Organisations need to be able to respond quickly to market and technology changes. These days, that means they need data to guide decision-making and be open to increased transparency and collaboration with partners, suppliers and even competitors. They need to have their own houses in order, but many are still coming to terms with what being a digital-first business means, let alone the reality of optimising one.
In the following series of articles we will look at how digital product innovation can go a long way to ensuring a business is creative and agile enough to keep their leading edge. A mature approach to product innovation can not only solve issues facing your business, but transform it to a new level where innovation is an everyday occurrence and value creation is the norm.
The problem with product
In its purest form, digital product innovation refers to using digital means to find solutions to business problems. The product could be a piece of software that keeps your data in usable order, a mobile app for customers to transact with your business or a platform that allows employees to collaborate with suppliers/partners or that creates visibility of your supply chain.
Whether called a digital product or a platform, software solution or ‘a piece of technology,’ many companies develop products in house or engage external designers or consultants. Unfortunately, however, in our experience, products are used mostly as a stop-gap technology measure rather than a holistic way of creating business dexterity and value. Left to age and gather dust, or used only in isolation, many companies don’t see the benefit of a company-wide, connected approach to repeatable innovative product development.
We see four main challenges that companies struggle with:
1. Connecting data to solve business problems
- A lack of visibility and reliability of data
- Data resides in disconnected silos across technology, business units and geographies
- Inability to make the data work for them beyond dashboard insights
The first step towards intelligent product innovation is data — it is the lifeblood of the business world, yet many companies struggle with how to harness it. While every organisation has it, it is often disparate, and found in multiple places, applications and formats. Data from one source is insightful to a degree, but through its connection to other datasets it becomes exponentially more useful in allowing your business to scope and address challenges, maximise opportunities and find solutions to add value.
Effort needs to be put in towards surfacing, collating, cleansing and analysing it and ensuring it’s connected across all your assets, geographies and locations. Importantly, it must then be used effectively to provide insights and inform decisions — that’s where a digital product will come in.
Many businesses think making data visible is the end stage of product innovation, but it’s just the beginning. A dashboard may tell you your ‘metrics,’ what’s going well or ill, but a static or ‘dumb’ dashboard won’t tell you what to do about it. With an innovative digital product, embedded with AI and automation, for example, not only will you know what’s going on now, but what will go wrong three months from now, and have that potential issue (such as machinery maintenance, or changes to customer buying patterns) adjusted or fixed before it becomes critical.
2. Combining tech and capability in the right way
- Speed to value (both in identifying and delivering)
- Technical infrastructure is not fit for purpose
- Ways of working needed to deliver aren’t optimised for rapid and iterative development
To excel, companies must not only have the underlying technology right, but the ability to capitalise on what it offers. Often we find when businesses fail to realise the promise in their tech investments, it’s because the structure and processes in place are not optimised for efficient delivery.
Using agile ways of working, product teams can innovate rapidly, building products in increments that can be tested and validated with customer feedback as they go, amending as needed. This results in much shorter cycle times (than say, dreaming up a product, building the whole thing and then testing it at the end) and gives business the ability to pivot towards value.
For example, we worked with a telecommunications company who was struggling with the speed needed to balance business and customer demands. By moving away from teams that handed pieces of work to each other down the line to ‘squads’ with the skills and capabilities to deliver as one, they were able to provide customer outcomes quickly and improve business performance at the same time.
3. Acceleration, repeatability and scale
- Duplication of effort due to lack of reusable design and technology assets
- Legacy infrastructure and technology architecture
- Lack of systems to rapidly prototype and validate solutions before development
When digital products fail to deliver, it may be because they are isolated pieces of technology that are not scalable or repeatable. To really deliver long term value and growth, digital product innovation needs to be a sustainable capability within the business.
A mature product function is one where the design, data and technological capability are entwined, and together, lead the approach towards innovation for the business as a whole. Innovative ways of working, backed up by the standards, practice and governance required to keep it safe, can reduce the waste of isolated or one-use products. With mature product capability, a product that solves one business issue will be able to be used to solve multiple issues, scaling up to drive true progress.
For instance, a large technology department we helped was struggling to maintain their multiple digital assets efficiently. By creating a design system of reusable parts (such as menus, buttons, content sections) the team was able to rapidly build new products and concepts without starting from scratch. It resulted in a 40 percent reduction in time to build digital products.
4. Leadership and culture
- Lack of leadership to guide the build and adoption of the new products (internally and with customers)
- Inexperienced (or multiple) product owners accountable for the digital product development and maturation
- No clear mission or objectives to help create clarity and focus
Digital products can transform a business, but they require a shift in mindset, behaviour and culture. The successful and seamless integration of digital and technology practices, with a culture focused intensely on design, value and agile mindsets, with leadership that reinforces the approach, will lead to a digital transformation. However, realising the bigger picture of this metamorphosis is a key factor to its success.
Organisations that have siloed business units with competing objectives and incentives may find this is a bigger challenge than they might think. But without transparency, collaboration and trust, it will be impossible to foster a culture that will support growth.
The benefits of a mature product innovation capability
The above challenges are ones that we see most often. A big part of product failures tends to be in the maturity of the approach to innovation — digital products are either viewed as a short-term IT project with a beginning and end, a point-to-point software solution to buy or outsource, or simply not seen as being part of a holistic business (or transformation) strategy.
To really benefit from digital products, and product innovation, companies need to view them as assets that they iterate and evolve across a lifecycle and maturity curve. Approaching digital capabilities in this way means that organisations can accelerate their product innovation internally and allow them to take control of their journey when it comes to solving business problems, successfully initiating a transformation or investing in growth opportunities.
In the next article in this series we will look at some of the specific components that organisations should be considering when it comes to maturing their product innovation capability to achieve greatness. In the meantime, keep an eye out for our Where next for digitalisation and data reliance? report for further information on digital transformation and your business — launching soon on pwc.com.au.