The importance of innovation management in digital transformation

February 12, 2018
4 mins

Digital technologies, and digitalization, in general, are completely changing the face of business. Embracing digital transformation is the only way to adapt to today’s digital era and transform your business to stay ahead of the competition. One of the vital contributors to digital transformation, along with a few other factors, is innovation management.

“It is not the strongest of the species that survives, nor the most intelligent that survives; it is the one that is the most adaptable to change.”

                                                                                                                           – Charles Darwin

What exactly is digital transformation?

Digitalization in organizations makes data easily accessible across different platforms, interfaces, and devices. The process of creating new business applications that assimilate this digitized and digitalized data is called digital transformation. Netflix is one of the best examples of digital transformation since the digitization of films, which paved the way for this new business model of movie streaming. Among the other game changers in the world of digital transformation that are worth a mention are augmented reality tools for the field service sector, predictive maintenance, and crowdsourcing. In all of these applications, innovation is the buzzword.

When it comes to digital technology, there are four perspectives that define and determine a successful transformation.

Four perspectives of digital Technology

The value of digital technologies for different groups of leaders falls in one of the four quadrants. The top left quadrant comes into the picture when the human resources and communication leaders want to make their workplace digital. Marketing leaders explore the top right quadrant when they talk about how cloud, social, analytics, and cloud technologies bring about a change in the way their organization engages with its customers, partners, or suppliers. The bottom left quadrant is the perspective in focus when the operational leaders think about the ability of digital technologies in creating digital operations capabilities. The bottom right quadrant is reserved for strategists as that’s where they start their work to look at digitally-powered strategies for changes to business models and new products.

How innovation management enables digital transformation

According to a report by MWD Advisors and HYPE Innovation, innovation management practices and tools enable open, iterative, and collaborative change to support digital transformation. Such practices can help organizations build a more innovative, open organizational culture by aiding their internal and external communities to adapt and fast-track innovation. They further enhance an organization’s innovation culture when they are applied to its business model, its products, and its processes.

Innovation management encourages an inclusive approach to innovation where everyone is allowed to participate and share responsibilities to define and achieve the organization’s goals. Contrary to the traditional, top-down innovation approach, innovation management makes organizations more responsive and agile and improves their adaptability to embrace the changes brought about by digital transformation. It makes digital transformation a part of that organization’s culture.

Innovation in traditional management processes and principles have the capacity to produce a dramatic shift in an organization’s competitive advantage. Innovation management practices make it easy to test, validate, and iterate in real-world scenarios on a large scale, both internally and externally.

Importance of innovation management in digital transformation

Here’s how innovation management makes digital transformation possible:

It accelerates the pace of change: Traditional approaches to change and innovation limit the number of ideas that can be converted in prototypes as only a few executives or senior employees are involved and they bring in only limited expertise. Implementing crowdsourced innovation management principles makes this process a communal activity by engaging the whole organization—its employees, partners, customers, and all the other stakeholders. This improves the pace and scale of innovation and disruption and their acceptance in the organization. Innovation management provides the innovation process structure, repeatability, and scale.

It goes beyond new product development: Since digital transformation has many positive effects on a business, innovation management can drive transformation in all the quadrants of the four perspectives on digital technology (shown in Figure 1). The open approach of innovation management opens the horizons of innovation beyond new product development and includes other aspects of business under its umbrella, such as building effective relationships with customers and other external stakeholders.

It drives new approaches to change: Innovation management principles and tools redefine the value of change in an organization, be it any change. It encourages its leaders and employees to define possibilities and play an active part in attaining those possibilities. Everyone’s inputs are acknowledged, appreciated, and rewarded. Innovation management builds a continuous innovation program that inspires new ideas, supports collaboration, and enables change to be an ongoing part of an organization’s culture.


Innovation management practices allow different groups of stakeholders within and outside the organization to work together. They enable them to collaborate to understand the consequences on business operations and working practices.

Innovation management provides a structured and scalable platform to convert ideas into prototypes. At the same time, it enables experimentation in parallel by teams collaborating across the organization. The concept of change becomes the force parallelly uniting employees, partners, and customers to enhance the business and its growth while they collaborate. The result of this collaborative, iterative change is an open and innovative organizational culture that empowers smooth digital transformation.

The digital age has already started to change the way organizations work. Innovations will continue to happen as digital transformation redefines businesses and revolutionizes industries. When there’s a revolution, there are winners and losers. Organizations that cannot keep pace with digital transformation are at risk of losing out and becoming outdated.

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About the Author

I am the co-founder and CEO of HackerEarth, I mostly do Business development for HackerEarth but I started my career as a programmer. I also have a passion for writing.

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