Corporate digital innovation is probably not what you think it is

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‘Innovation’ is something humans have always done, consciously or otherwise. You could argue that ever since one cell split into two and our evolution began, humanity has been on a path of constant innovation. We are collectively driven by an imperceptible biological urge that seemingly trumps all. Today our technology has evolved to a point of sheer marvel, this need to innovate so strong that no moral or ethical dilemma has yet stopped us in our insatiable quest for growth and increased efficiency.

The term ‘innovation’ itself (and its contemporary meaning), however, is not something corporate marketers have always been packaging up in a way that helps them sell their wares and motivate their employees. In fact, Canadian historian Benoît Godin suggested that if someone called you an innovator in the religious climate of the seventeenth century it probably would have been an accusation, not a compliment.

By the time of the Industrial Revolution, though, innovation had begun to take on its modern association with science and technology. It was then that the terms invention and innovation became distinguishable, with ‘invention’ primarily referring to an act of creativity for its own sake, and ‘innovation’ chiefly denoting inventions that helped to make profit-driven operations more productive and efficient.

Today, it’s all about ‘digital innovation’. The Google Trends chart below indicates that over the past few years, acknowledgement of and interest in the digital innovation concept has reached critical mass in our society, or at least in the business world.

There is something unique about digital innovation compared with previous forms of human innovation, and that is the vast potential of digital technology’s application and the layman’s difficulty in understanding and taking advantage of that. Think of it this way, if you were to explain Gutenberg’s printing press to a newsmaker in the fifteenth century, there’s a good chance he would have understood the mechanics of its operation and grasped exactly why and how it would help his cause.

The same cannot as confidently be said for explaining digital technology to business-minded executives today. They cannot reasonably be expected to really know how a computer is built or how it works, how data is processed or how the internet connects people and things. However, they can figure out how to benefit greatly by purchasing and using those products. Perhaps that is why so many people are searching for and scratching their heads over digital innovation, rather than just doing it. It is also why digital technology companies are (wisely) marketing their products in rudimentary and abstract ways that focus primarily on ‘business benefits’, rather than trying to explain what they actually do.

So is ‘digital innovation’ the digital technology manufacturer’s implicit way of saying “don’t worry, we got this” to traditionally non-digital companies seeking to use data to become more productive and efficient? Well, Godin tells us that ‘innovation’ was often thought of as a neatly packaged product between the 1950s and the 1980s, and that government funding at the time reflected that thinking. The Canadian federal government’s $900 million ‘innovation’ investment pledge over the next few years could be considered a hangover of that mentality.

Unfortunately, it’s not that simple anymore. In a world where digital companies are single-handedly decimating or reshaping entire industries and niche markets on their own, businesses cannot just rely on outsourcing innovation or buying a digital technology suite and expecting it to work. Of course, virtually all businesses know this by now, and don’t need to hear that lecture again. However, knowing it isn’t the same as knowing what to do about it.

It’s been interesting to observe the debate over whether there is or ever was any value in such roles as Chief Digital Officer or Chief Innovation Officer. In 2014, IDC said that by 2020, Chief Digital Officers would have replaced 60% of CIOs in global organizations. Halfway into that timeframe and with it looking unlikely that lofty prediction will come true (growth of CDOs has slowed heavily), people are asking why.

One criticism is that “hire a Chief Digital Officer!” was a panicked, quick-fix reaction to the lackadaisical attitude shown towards digital transformation during the ten to fifteen year period before it began ransacking established industries. Businesses suddenly find themselves in a world where virtually everything new is digital, so hiring a Chief Digital Officer now could be considered akin to hiring a Breathing Specialist. Of course, the Chief Digital Officers themselves might argue it was they who shifted boardroom conversations and finally made things happen.

Regardless, it’s worth remembering that job titles don’t mean much, and anyone spending time worrying about the semantics of their job title is probably missing the point of innovative thinking. So what should businesses do instead to tackle the issue of digital innovation, the definition of which is constantly evolving and expanding?

If you work for a corporation, you’ve probably heard the term ‘intrapreneur’ by now. This romantic ideal that employees of large organizations with complex structures can free themselves from the shackles of corporate governance to dream and create certainly has zest. However, it’s often brought back down to earth when the pressure to convert creativity into market value rears its familiar head.

Frustrated intrapreneurs complain about bureaucracy and endless layers of gatekeepers – legal teams, procurement officers, compliance officers and the like – who stop them from innovating. They say they have to bend the rules to make things happen. They say their entrepreneurial mindset goes unrewarded while paper-pushing managers who shut them down end up with the promotions and bonuses. They say that when executives talk a big game about their business’s digital innovation culture, it’s all too often lip service.

They say the business needs a new approach that from the CEO down empowers intrapreneurs and promotes creative thinking, though they tend to be light on details about what that approach could actually be within the confines of a profit-driven enterprise. Intrapreneurs have a habit of painting themselves as the heroes and the corporate management teams as the villains. They say it’s the job of upper management to “keep them engaged” and allow them to “thrive in a culture of innovation”.

It would be very difficult to argue that corporate sluggishness and bureaucracy has not increased over the past ten to fifteen years because of greater inherent complexity. Some bloated corporations have seemingly become totally incapable of innovating at all, relying on the agility of startups and acquiring them before they steal too much of their market share. Others rest on the shoulders of digital technology partners, trusting that they alone will be able to save them from a fast and painful demise.

This doesn’t mean, however, that the hero-villain mentality of some intrapreneurs isn’t blinkered. While some of them do eventually leave the corporate world in exasperation, going on to either prosper or fail as full-blown entrepreneurs, the rest stay and either get on with the job of innovating as best they can or complain that they’re prevented from doing so. To the latter, I ask what do you really expect? What do you think the top brass can do to satisfy your desire to invent without the burden of creating shareholder value? Do you think any executive in the boardroom or any procurement officer wants the business to be a victim of the digital revolution and is intentionally putting in place roadblocks to make that happen?

Thinking this way allows all corporate employees to understand how everyone has a stake in and a responsibility for digital innovation, whether they appear on the surface to be fostering it or hindering it. In a highly complex global organization, the legal team has just as much accountability for innovation as the IT team. For it to work, however, managers and gatekeepers need to have the right mentality and the right knowledge. They need to have an understanding of what definitely shouldn’t be done, as well as a level of flexibility and common sense that allows them to encourage the things they can let slide. They can’t be expected to let intrapreneurs run wild and take huge risks, but they also can’t demand that intrapreneurs operate in a risk-free climate.

In the words of SAP CEO Bill McDermott, “Managers need to be open to new thinking, but colleagues need the courage to push when they really believe. Let’s be clear: this will be messy.”

So there you have it. Digital innovation is not a product. It’s not a meeting with a team of ‘digital experts’. It’s not the hiring of a Chief Digital Officer. It’s not a one-size-fits-all approach to changing business models and yadda yadda yadda. For enterprises, digital innovation is about acknowledging the natural friction between inventors and gatekeepers and addressing it at every turn. It’s about striking a balance between running the business in a way that keeps shareholders happy while making enough room for dreamers and inventors to find potential in digital technology that might eventually make those shareholders even happier.