Digital technology to transform innovation process, research finds

Digital

Arthur D. Little has published a new research report that highlights the impact digital technology such as Artificial Intelligence (AI), advanced analytics, self-learning systems and the Internet of Things will have on the innovation process.

Of the respondents in a global survey, 93 per cent agreed that digital innovation will fully or partly transform their organisation.

Leaders will benefit from a 1.7x increase in innovation performance, rising to 2.4x for those that are able to optimise their operations through digital.

This is leading to 95 per cent of companies from across all industries to aim to fully digitalise their innovation engine or entire company.

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However, respondents recognise that this entails transformative change – 89 per cent say that successful digital innovation will require a new approach to innovation management.

Not every company will be able to achieve this. The report sees the emergence of four clear archetypes – digital natives, pioneers, traditionalists and aspirants, with varying attitudes and budgets for digital innovation.

For example, 72 per cent of aspirants admitted that their organisation was still discovering the potential of digital, against 31% of digital natives.

Additionally, the gains from digital innovation will not be distributed evenly, with many companies still struggling to unlock its potential.

Barriers such as a shortage of digital thinkers (seen as significant/very significant by 71 per cent of respondents) and capabilities (64 per cent) threaten to hold back companies, particularly in industries such as manufacturing, food and beverage and engineering, from seeing the concrete benefits of digital innovation.

Michaël Kolk, partner and digital innovation lead at Arthur D. Little, said all organisations understand that digital technology will transform innovation and deliver enormous benefits.

“However, our report shows that these benefits will be unevenly distributed, with many organisations struggling to overcome barriers that are holding them back.

“Now is the time for this group to begin their digital journey in order to successfully prepare for the future,” said Kolk.

Arthur D. Little recommends a threefold approach to drive success – designing solutions for broad user adoption of digital innovation, running controlled pilot programs for cutting edge technology and monitoring and experimenting with potentially disruptive applications.