May 18, 2022 · 4 min read
In the second step of our series on successfully scaling digitization projects, we look at the importance of an innovation strategy in guiding pilot projects to rollout. The big-picture thinking guiding a corporation can ease the integration of innovative solutions—or leave them behind.
We launch pilot projects because we want to innovate. According to McKinsey, 84% of CEOs believe that innovation is critical to growth. Meanwhile only 6% of CEOs are satisfied with their innovation performance.
What accounts for this gap between conviction and performance?
Remember, only about 30% of companies that launch IIoT pilot projects are able to scale them. As an act of innovation, scaling a digitization project will run into the problems faced by firms’ attempts to innovate in general—no matter how successful the pilot project was.
This is a problem of strategy—or lack thereof. A pilot project can address real problems and deliver demonstrable results, but this is only a tactical success. Rollout requires firm-wide, big-picture thinking: an innovation strategy.
For businesses, strategy requires a lucid understanding of three things: the organization's goals, the market, and the organization's own strengths. From there, all that’s left is to execute. This is when we can scale our pilot projects! Applied to rolling out digitization projects, innovation strategies clarify objectives, focus efforts, and connect diverse stakeholders.
HOW INNOVATION STRATEGIES AFFECT ROLLOUT
There’s a legendary story in Silicon Valley that illustrates how innovation strategies work.
In 1973, Xerox introduced the first desktop computer to the world. The Alto had a bitmapped screen, a mouse, a Graphical User Interface (GUI). It could connect to other Altos through Ethernet. It ran a word processor. It could send emails. It even had a paint program. It had everything we expect from desktop computers. It should have been revolutionary.
It sold 120 units.
The Alto was the product of Xerox’s legendary Palo Alto Research Center (PARC)—primordial ooze for computer development. PARC invented first after first for computing, and put it all together in the Alto. But the business side of Xerox never saw the Alto's potential, didn't appreciate PARC's strengths, and remained disconnected from their research department's miraculous work. That Xerox never capitalized on the Alto may be the biggest strategic blunder in the history of computers.
But was it really?
Consider Xerox’s position in 1973: they were a printer company! Their goal was to sell printers. They were familiar with the printer market. They made great printers. And they, therefore, sold a lot of printers. Around the same time that they were creating the Alto, Xerox PARC also invented a laser printer. Xerox had no problem bringing this innovation to market because that was their strategy all along.
The inspiration for AiSight came to one of our founders thanks to his experience at a major automotive company. The automotive sector is ruthlessly competitive. To survive, automakers push constant innovation in material sciences, engineering, and even marketing—all unified behind a clear objective: selling more cars.
To this end, automakers also want to reduce downtime on their production lines. But developing a proprietary predictive maintenance system isn’t economical, and creating one to provide to other manufacturers is not part of their strategy. This is where AiSight comes in—we provide the predictive maintenance solution that fits their innovation strategy.
CLARIFIED OBJECTIVES OF ROLLOUT
When we consider the Alto and the laser printer, we see two Xerox innovations; one consistent with their innovation strategy, the other not.
With the benefit of hindsight, we know how big the Alto could have been. But in the early ‘70s, the desktop computer was an unproven product, with a nonexistent market, that Xerox had no ability to mass produce. While selling the Alto could have made Xerox an alternate-timeline Apple, it also could have distracted from their core business, soaked up capital, and weakened their brand. Xerox’s strategy protected them from that outcome and guided their innovation in the direction that worked for them.
The issue here isn’t that Xerox didn’t innovate—they did. The issue isn’t that they didn’t have an innovation strategy—they did. The issue is that Xerox knew their objective very clearly. It just wasn’t selling desktop computers.
When we launch a pilot project, we're more likely to successfully scale if we do so with a big picture objective in mind. A company with an innovation strategy will know that objective, and rally around it. The result is an organization that pulls together towards innovation. This is an atmosphere in which our digitization projects can scale.
FOCUSED EFFORTS AND INNOVATION STRATEGIES
Before an organization can work together on innovating, leadership has to want it. This reinforces the value of getting high-level decision makers involved in step one. They have the influence to create and direct an innovation strategy. They also have the ability to direct resources towards it.
Leaders can, for example, designate an innovation task force. Any team introducing an innovative solution without the support of a strategy runs into the reality of day-to-day business: it’s busy. Nobody has time to divert from their normal duties. There are always short-term goals—quarterly earnings, product launches, clients, coworkers, lunch—the big picture can get lost in the minutiae without people actively keeping it in view. The innovation task force can take care of the new responsibilities that innovation demands.
This, in turn, allows the seamless integration of innovation into operations—both in innovating, and in using innovations. Putting innovations to use—that’s rollout! It also involves introducing our project to a whole lot of stakeholders.
Our project is out of the silo. The innovation strategy guiding us has built the lateral connections throughout the organization that we’ll need to scale. This is where we get the stakeholders involved—from the managers who need to know about it, to IT who will integrate it, to the colleagues who will use our innovation every day.
That’s the topic of our next article: The Stakeholders. Rollout will—and should—shake things up. We want to keep everyone informed and on board.
Keep an eye out for part three of this series.
In the meantime, why not get started on your own successful rollout?
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